Yesterday’s news report noted that the Federal Reserve Bank was reducing the federal funds rate to the range of zero to 0.25%. And in the next breath, the newscaster noted that the Fed was going to spend $2 trillion to buy up assets. (‘They’d buy up Picassos if they thought it would help the economy,’ a commentator quipped.)
A couple of months ago, we were told that the world would come to an end if Congress didn’t pass a measure allocating $750 billion for the purpose of purchasing ‘toxic’ assets. Since then, some of the money has been spent buying ownership stakes in banks, and the White House has been contemplating using some of the money to help the automobile manufacturers, but none of it was actually used to buy assets, i.e. what it was allocated for.
So now we have the Fed running around buying assets.
Does this mean that the Fed could have done this at any time, and it didn’t need an allocation from Congress?
(No, not at any time. Only when it was funny.)
Then what was the point of the $750 billion that we needed to save the world–half of which is still sitting there, and the other half was used for stuff that had nothing to do with the purpose it was allocated for?
Our leadership is either fantastically stupid, or they’re robbing us blind.
And my problem is, from my perspective, I can’t discern which of those alternatives is actually the case.