Agree/Disagree: "Fed's actions today show how the government is needed to assist the free market"

Question

In response to recent market drops, the Federal Reserve increased the money supply.

The Fed said in a statement, "'The Federal Reserve is providing liquidity to facilitate the orderly functioning of financial markets."

Source:
http://news.yahoo.com/s/nm/20070810/bs_nm/centralbanks_dc_4

Answer 1

Agree, obviously. Without government intervention in the last few days, both by the Fed and the ECB, the markets would take a far steeper fall before correction.

Answer 2

I agree that the action of the Federal Reserve helped stabilize the current mess with the subprime loans. Lowering interest rates, making money more affordable, can help.

At the same time, I don't like the government tweaking the markets in general. The Fed and Greenspan (who generally did an outstanding job although no one knew what the hell he was saying most of the time) was in a great part, responsible for the enormous downturn in the early part of this decade. True, the tech bubble was probably the greatest culprit, along with other factors such as the Asian economic crisis contributed and the attacks on 9/11 but the mismanagement of keeping interest rates high helped.

So, yes, it helped but often the Fed's actions do not.

Answer 3

Well if you call your Federal reserves a government entity you may be rigth, but since they are mostly privately owned and Incorporated in Delaware (where names of the owners are kept secrets). So what you are witnessing now, is a huge consolidations of their banking power over the whole US estate market! Which means that most houses in the US and most of the rest of the occidental world, is now owned by a coalitions of Bankers... Which also means that governments have lost most of their REAL governing power to them!

So this step mark a final moves before the big event!! Let me tell you that the next big thing will be so big, that even the bankers are scared of the impact of such event (thus the consolidations moves accross western countries). And since it happen so fast, it means that its gonna happen in the next few weeks, before the end of this year...

Answer 4

The FED does this to regulate the ups and downs of the market. They also force banks to insure with the federal government. People don't want another Great Depresssion.

Answer 5

It basically benefits the wealthy elite, eventually we will go into a depression then we will be told we need to form a union with canada and mexico and have a new monetary system the Amero.

BTW CHI GUY the federal reserve is NOT part of the government. Look it up. It is privately owned bankers in other countries.

Answer 6

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Answer 7

Keynesian Economics.

but you have to realize that what they're doing is increasing the threat of inflation while causing a further deterioration of the value of the US dollar against other currencies. Which will drive up the long term interest rates on US debt securities and worsen the alreadt $5billion monthly interest payment on the national debt.

That's the part the Cons aren't telling ya.

Answer 8

Government, needs to know when to get in and when not to get in. The difficulty is having that balance. But government lite is the most efficient.

Answer 9

The Fed isn't quite exactly part of the government...

... but, no, it's actions - or the government's actions that affect markets - are not evidence that the market's need government 'help.' Such actions merely show that governments can't resist interfering in markets.

Answer 10

Somewhat agree. However, I also blame Lenders for their creative financing that sucker people in no interest loans. Allowing them to bank on the fact that rising home values would allow them to capture their money in the event of a foreclosure....IF YOU CAN'T AFFORD IT, DON'T BUY IT!!!