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The right tools have yet to be deployed:
- Lending to member banks on an unsecured basis (demanding collateral is redundant).
- Providing banks with term financing at rates set by the FOMC (mortgage rates, etc. can be directly set as desired).
- Prohibiting bank sales of financial assets (buy and hold only and no interbank markets).
Instead we have the results of a government that doesn’t understand its own monetary arrangements and has implemented policy that for the most part has made a difficult situation all the more difficult.
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by Steve Matthews
March 7 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the central bank will ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œforcefullyÃƒÂ¢Ã¢â€šÂ¬Ã‚Â use every resource to restore financial-market stability and revive U.S. economic growth.
ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œWe will continue to forcefully deploy all the tools at our disposal as long as necessary to support the restoration of financial stability and the resumption of healthy economic growth,ÃƒÂ¢Ã¢â€šÂ¬Ã‚Â Bernanke said in prepared remarks for an event today in Dillon, South Carolina. The Fed chief returned to his hometown to attend a ceremony naming a highway interchange after him.
Bernanke didnÃƒÂ¢Ã¢â€šÂ¬Ã¢â€žÂ¢t comment on specific Fed policies in his remarks. He said he was aware Dillon now ÃƒÂ¢Ã¢â€šÂ¬Ã…â€œfaces challengesÃƒÂ¢Ã¢â€šÂ¬Ã‚Â with the economy in a recession.