Monetary policy is complicated
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Re:More articles like this please (Score:5, Informative)
by kryptKnight (698857) on Thursday October 29, @12:35AM (#29906647)
It’s time to bring some facts to this thread. Monetary policy is complicated, most people don’t understand it, and impassioned hyperbolizing isn’t helpful.
..the Fed (by printing money and giving it to them at zero percent even if it destroys the dollar)
The Federal Reserve does not print money. Maybe you were speaking metaphorically, but you’re still wrong. The Federal Reserve can influence interest rates, and it can change the size of the the money supply [wikipedia.org] by issuing and recalling treasury bills and by adjusting the reserve requirement.. Those functions allow the Fed to alter the price of money, but that’s not equivalent to printing more money.
I was reading earlier this week the U.S. now has the greatest income inequality in the world except for Singapore and Hong Kong which are tiny city states
Well you read wrong. Equality of income distribution is quantified by the Gini coefficient [wikipedia.org]. Wealth is less evenly distributed in the US than many places (ie Europe), but there’s more than 40 countries ahead of us. China and Mexico for instance. See this map [wikimedia.org] for more detail.
For anyone whose interested, the Planet Money blog and podcast [npr.org] is a great place to start. Their reporting and research is done by actual economists rather than ideologues and talking heads, and they explain why things are the way they are and how they got there. Like I said, our current financial situation is kinda FUBAR, but approaching it with a level head and trying to understand what’s really going on is better than getting angry and playing the blame game.
Re:More articles like this please (Score:5, Insightful)
by demachina (71715) on Thursday October 29, @01:28AM (#29906913)
“The Federal Reserve does not print money.”
Read up on quantitative easing. It is what the Fed’s been doing massively since the crisis. It is printing money though its done electronically. From Wikipedia:
“Quantitative easing is another way to influence monetary policy, only recently begun to be used in the United States. Other countries, such as Japan, have provided a template for some Fed actions. Essentially, quantitative easing provides a method for the central bank to provide funds at lower than zero interest rates, in order to increase the monetary supply and combat deflationary forces. This is accomplished by the Fed purchasing U.S. government debt with newly printed U.S. currency. In essence, the Fed is monetizing the debt. In the current (late 2007 to today) macro-economic environment, the slowing velocity of money has induced U.S. central bankers to pursue a variety of new, and to some radical, policies to produce economic stimulus.”
They also allowed Goldman Sachs and Morgan Stanley to acquire bank charters so they have access to this free money to fuel their commodity, stocks and bond gambling. It is helping to fuel the current bubble in stocks, bonds and commodities.
It is inappropriate for investment banks to have access to the discount window. Paul Volcker has been lobbying hard to get the Obama to stop it, but Geitner and Summers being stooges of Wall Street are ignoring him. Discount window access should only be allowed to conservative commercial banks who don’t gamble on the stock market. Ever since the repeal of Glass Steagel and they let Citigroup access it, and certainly since they let Goldman Sachs, Morgan Stanley and what’s left of Merrill access it they’ve created massive potential for abuse and for bubble creation.
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