2 ms·
If the Fed would actually do it's job and drain the swamp (remove excess credit from the system), it would help calm the bubbles.
by gills 18y ago
If the Fed would actually do it's job and drain the swamp (remove excess credit from the system), it would help calm the bubbles.
- bayareaguy 18y agoIf you agree with this line of thinking: The Great Moderation - http://www.winterspeak.com/2008_07_01_archive.html#1502659962533085800 http://www.winterspeak.com/2008_07_01_archive.html#150265996... then the real issue is relative rates of consumption.
- steveplace 18y agoHow can they remove excess credit? If they do, it would collapse the financial industry. That's why they had to bail out BSC.
- gills 18y agoIt wouldn't collapse [all of] the financial industry. Any banks which may already be insolvent without FRB loans would have to declare bankruptcy. There are probably a couple solvent banks out there. Failure seems to be a fair and natural outcome for businesses that are poorly managed or choose unsustainable business models. The FRB can remove the slosh by not rolling over loans to primaries when they come due, and by putting back the trash securities they took as collateral through the TAF and TSLF.