Thus, the Fed continues to expand its balance sheet to swollen levels, and what is one left with to infer from these statements and intentions? It is a safe assumption to acknowledge that in spite of the trillions of dollars in bailouts and stimulus, the credit markets (at least according to the government) are still in a state of disrepair. This is how money printing as a remedy continues to be justified. The trillions of money printing has not worked yet? Solution: Just print more. So we have a problem which the provided solution is clearly impotent to solve. Answer: just keep doing it!
There seems to be divergent views as relates to the state of the credit markets depending on whether you are listening to the Federal Government, Investment Banks, and multi- national commercial banking conglomerates OR to regional banks and others who were not involved in the CDO, CDS environment over the last decade. That said, while the problem itself and so-called solutions are all ambiguous at best, there are certainties. The relentless printing of money as a policy solution is going to destroy the purchasing power of the Dollar. The Federal Reserve either expects a serious worsening of the economic landscape going forward and/or must be concerned that foreign debt buyers are beginning to become concerned and potentially losing interest in financing their money printing adventures.
So, the American citizens are left with a policy approach which continues to be ineffectual at best, the prospect of a potential worsening of the economy as a justification of continuing the policy, and the reality that significant inflation in daily life is coming.
Alexander Hamilton must be proud....
