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The Fed’s Response to the Financial Crisis: More of the Hair of the Dog That Bit Ya

Posted By admin On October 23, 2008 @ 3:43 am In Money Watch | Comments Disabled

George Washington’s Blog [1]
Thursday, Oct 23, 2008

John Riley nails [2] in a single paragraph what the government is doing wrong in responding to the economic crisis:

The Fed’s response to the financial crisis has been more of the hair of the dog that bit ya. Virtually everything the Fed is doing is increasing debt, not decreasing it. It seems that the Fed’s theory is to keep the drunk drinking to avoid the inevitable hangover. As we have said many times, the longer you put it off, the worse the hangover will be. And we are due for a whopper, thanks to the bartender, I mean the Fed’s irresponsible actions.

Riley has summarized in a few words what the Austrian school of economics, Ron Paul, and everyone else with a good head on their shoulders has been saying for a long time. The problem is that too much credit, artificially low interest rates and cheerleading for the binge by Greenspan and company led to massive malinvestments [3]. The only way to get through the financial crisis is to tough it out until the hangover is really over.

Other people have used the image of heroin to make their point. For example, Financial analyst Puru Saxena compared the bailouts with “shots of heroin to fix the problem of an addict [4]“.

The Fed’s Response to the Financial Crisis: More of the Hair of the Dog That Bit Ya  161008pptv3 [5]


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URLs in this post:

[1] George Washington’s Blog: http://georgewashington2.blogspot.com/2008/10/feds-response-to-financial-crisis-has.html

[2] nails: http://www.myprops.org/content/John-Riley-If-you-liked-Act-1-just-wait-until-Act-2-pdf/

[3] malinvestments: http://mises.org/easier/M.asp

[4] shots of heroin to fix the problem of an addict: http://www.cnbc.com/id/27176315

[5] Image: http://www.prisonplanet.tv/subscribe.html

[6] Will the Swine Flu Get the Same Response as the Financial Crisis – Protect the Status Quo without Really Changing Anything?: http://www.prisonplanet.com/will-the-swine-flu-get-the-same-response-as-the-financial-crisis-protect-the-status-quo-without-really-changing-anything.html

[7] Did The Price Of Oil Help Cause The Financial Crisis Of 2008? Will Surging Oil Prices Soon Spark Another Financial Crisis?: http://www.prisonplanet.com/did-the-price-of-oil-help-cause-the-financial-crisis-of-2008-will-surging-oil-prices-soon-spark-another-financial-crisis.html

[8] The next financial crisis will be hellish, and it’s on its way: http://www.prisonplanet.com/the-next-financial-crisis-will-be-hellish-and-it%e2%80%99s-on-its-way.html

[9] What’s Behind the Financial Market Crisis?: http://www.prisonplanet.com/whats-behind-the-financial-market-crisis.html

[10] Financial Crisis Inquiry Commission Slams Greenspan, Bernanke, Geithner, Paulson, Summers, SEC, Rating Agencies and Big Banks for Causing Crisis: http://www.prisonplanet.com/financial-crisis-inquiry-commission-slams-greenspan-bernanke-geithner-paulson-summers-sec-rating-agencies-and-big-banks-for-causing-crisis.html

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