Is the Fed relevant or do they cause more harm than good?
The answer is “yes,” they are relevant, as long as people still think the Fed is relevant. The real question that needs to be answered however, is how much longer can the Fed keep playing this game and pulling the wool over the People’s eyes?
The Fed uses it’s “tools” and tries to produce price stability. They haven’t been doing a good job of that as prices have risen in most all sectors.
Unfortunately the Fed is expanding their duties to produce “market” stability. They’ve been doing it all year by interfering in the markets via the lowering of the Fed Funds rate. This, IMO, and the opinion of many others, will eventually come back to haunt them.
The Fed can’t bail out every company that comes crying for help. The bankruptcy of Lehman was a good thing. It showed they are not bailing out everyone. However, AIG is rumored to be involved in talks with the Fed. AIG should declare bankruptcy too, but the Fed is worried about the repercussions of all these financial institutions declaring bankruptcy, especially all at once. They are trying to prevent the whole system from crashing.
Could the nationalization of airlines be too far off. What about the auto industry with GM and Ford? Can the Fed allow them to fail? Has the Fed interfered in this industry before (Chrysler)? Heck, Chrysler is asking the Fed for loans now to help them with the electric car business! It worked for them once, why not ask for more?
The Fed will continue to bailout anyone as long as people still believe they are relevant. At some point, this “belief” will disappear. We all know what will happen next. We won’t like it, but hopefully one is prepared. I think this will only be strike two. In 1929, the stock market crashed but the dollar was still around.
But in 1933, the government needed to confiscate the People’s gold to prevent them from becoming insolvent. Bernanke has praised this action in his past speeches. The last thing our government and the elitist politicians that want to stay elitists want, is for any type of Sound Money or Honest Money system. What will their choices be if push comes to shove? We all know “they” can confiscate any and every “thing.” This will be strike three for the Fed.
It will come down to either confiscation or replacement of the system with Sound and Honest Money (like Gold). Who will make that decision? We all know what our government would choose. What will the People choose? And will the 2nd amendment still be around to enforce the will of the People?