Tuesday, October 14, 2008

Too Much

From Essence of the "Rescue" Plan by Michael Shedlock:

But let's step back and ask ourselves why it is we need an office of Secretary for Financial Stability in the first place.

The answer is we have an unsound banking system based on fractional reserve lending, compounded by micromanagement of interest rates by the Fed, and runaway spending in Congress.

To date, I have not heard one single sentence from anyone important enough to matter, about what really went wrong and why. Instead we have yet another governmental body attempting to add "financial stability" while doing nothing to address the root cause of this mess.

The worst part is the Fed and the Treasury have decided the problem is that banks are not lending enough. The reality is that banks have lent too much.

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