The FED--savior or magician?

[Fishhead24]

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My thoughts on the subject recently:

If the money supply shrinks, which I assume would happen if the housing market crashes. The loans speculators bought real estate with created a ton of money inflating the money supply and the dollar goes down. Everybody thought they were gonna get rich and spent their money helping the economy. As these loans go in to default the money supply will sharply fall unless the government comes up with something to create and thus spend a lot money on (like a social program or a war). I speculate that something big will have to change, I am thinking a steep recession. I do think the OP does have a point, if the government runs out of things to motivate people to spend on, there will be an inevitable crash.

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Your a very intelligent individual.

[DcifrThs]

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My thoughts on the subject recently:

If the money supply shrinks, which I assume would happen if the housing market crashes. The loans speculators bought real estate with created a ton of money inflating the money supply and the dollar goes down. Everybody thought they were gonna get rich and spent their money helping the economy. As these loans go in to default the money supply will sharply fall unless the government comes up with something to create and thus spend a lot money on (like a social program or a war). I speculate that something big will have to change

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if it is really that bad (which it very well may be), something will change liek you said. the fed will lower the fed funds rate and increase liquidity in teh system...this will avoid the worst part of any upcoming recession.

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, I am thinking a steep recession.

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possibly, if the fed decided to stop doing its job.

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I do think the OP does have a point, if the government runs out of things to motivate people to spend on, there will be an inevitable crash.

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the fed (which is not actually part of the govt), can create a solid motivation by increasing liquidity in the system w/ a lower interest rate enough to avoid a serious recession/depression (since a steep recession would likely be longer than 2 quarters of negative growth, depression may be the term).

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you are an intelligent individual.
FH

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now i'm not calling superadvisor stupid in this next part...just that he/she failed to include in his discussino of an upcoming recession the very institution whose job it is to reduce the pain felt during the down side.

who i am calling, lets say, special, is you fishhead because you made a post about the fed (with some seriously "special" comments), then called the person who responded with your thoughts on the issue "intelligent"...except that person didn't talk about one of the biggest factors againsthe very argument you like.

your title should probably be "BFI's Short Bus Propagandist"

Barron

[GoodCallYouWin]

The FED does not have magic powers; indeed it is not the saviour of western civilization that it constantly claims to be, but rather the inventor of the boom - bust "business cycle". What happens is, FED floods market with ez money so entrepreneurs can now make "profitable" investments (that are really unprofitable, but they can't tell because they use prices to make that decision and the ez money distorts their info). So all the investments are made, everyone makes money, world is perfect! Hurray! Then the bust comes, the ez money is retracted, the malinvestments are liquidated and we have the bust phase. Also the FED steals money from you right out of your wallet, without even giving you the benefit of a tax to bitch about.

[DcifrThs]

[ QUOTE ]
The FED does not have magic powers; indeed it is not the saviour of western civilization that it constantly claims to be, but rather the inventor of the boom - bust "business cycle". What happens is, FED floods market with ez money so entrepreneurs can now make "profitable" investments (that are really unprofitable, but they can't tell because they use prices to make that decision and the ez money distorts their info). So all the investments are made, everyone makes money, world is perfect! Hurray! Then the bust comes, the ez money is retracted, the malinvestments are liquidated and we have the bust phase. Also the FED steals money from you right out of your wallet, without even giving you the benefit of a tax to bitch about.

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yea, this isn't being discussed right now on 2 different forums and in a thread on this forum (that has moved back to a page or two behind front page).

Barron

[GoodCallYouWin]

"yea, this isn't being discussed right now on 2 different forums and in a thread on this forum (that has moved back to a page or two behind front page).

Barron "

I'm not sure what you are implying but of course my post was not only 100% correct but also 100% appropriate for this thread... I mean he was asking about the FED and I explained what it does... not exactly a hijack.

[DcifrThs]

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"yea, this isn't being discussed right now on 2 different forums and in a thread on this forum (that has moved back to a page or two behind front page).

Barron "

I'm not sure what you are implying but of course my post was not only 100% correct but also 100% appropriate for this thread... I mean he was asking about the FED and I explained what it does... not exactly a hijack.

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yet you don't dael with what would happen if it DIDNT do what it currently does, nor deal with the benefits of it doing what it currently does.

therefore, despite being correct, it is in poor form since you only take 1 side of the discussion.

further, i didn't want to go down this road ehre since there are 2 other threads specifically made to deal with this post.

simply searching for FED in the subject line can find a third here in BFI.


Barron

[GoodCallYouWin]

"yet you don't dael with what would happen if it DIDNT do what it currently does, nor deal with the benefits of it doing what it currently does."

If it didn't do what it currently did, we would just have a straight line of prosperity... well, you couldn't have fiat money you'd need sound money, but that's not a problem in my opinion. Also banks wouldn't be able to defraud the public, but that's not a problem either...



"therefore, despite being correct, it is in poor form since you only take 1 side of the discussion. "

Ok, next time I'll remember to include the nonsense arguments just to satisfy you???? You clearly provided them a few posts up anyway, so I'm not sure what your problem is.