The other night after Tennis 4 of us decided to go to dinner. We talked about sports politics and many other things a bunch of guys out for a meal and a couple of beers talk about. One of the things that struck me and I hear so often is, "The government is bailing out the brokerage houses. The government is bailing out the banks. Many ,many, people think, still, that the Federal Reserve is part of the government.
The Federal Reserve, from now on the Fed , is not a branch of the government. It is not a cabinet position. It is not part of the government. The Fed was created In the 1800'S because government could not control itself over printing and distributing money . Prior to the Fed, Congress and the executive branch had "pet" banks and controlled the printing and supply of money. In a rare act of self realization the boys in D.C., they were all boys then, figured out they could not control themselves. So they created the Federal Reserve bank independent of the Government. Now for sure Government is concerned about monetary policy. But the Fed is charged with creating a system that insures the nations financial health as it relates to monetary policy. So the Fed is separate .
Recently the Fed has stepped in to help with the credit crunch. Months ago I was blooging about this being the real problem. The fed is loaning money now outside of the commercial banks. The first time since the great depression. Yes, that is how serious this really is. My problem with the fed is they did this on the backs of Middle America. They lowered the rate so much that they devalued the currency. This devaluation leads to you and me paying more for everything while the guys who made this credit mess got to borrow money at a greatly reduced and favorable rate. That is my problem with all this. I think the fed chairmen was stampeded in to this and once again has helped the rich bail themselves out at the expense of the not so rich. I have no problem with the bail out. I do not want to see bank runs. But I think the guys that made this mess should not get special treatment when it comes to rates that they borrow out. ESPECIALLY if it cause me pain at the grocery store and pump.