700 billion dollar rock and a hard place

Noooooooooooooooo not again!!! Most of the problems in Wall Street are a direct result of government interference in the stock market. The creation of Fannie Mae and Freddie Mac, Carters Community Redevelopment Act, Clinton passing the Gramm-Leach-Bliley Act that repealed the Glass-Steagall Act, and Greenspan and Bernanke lowering interest rates and artificially inflating the housing market.

The second housing market was created to make it easier to get a home. The lender could take risks they would never take if they had to keep the risky mortgages on their books. Now it has fallen apart. The system of big investment banks does not work. The Community redevelopment Act was created to make it easier to get a home. It forced lenders to make capital available in low-and-moderate-income urban neighborhoods despite being a bad investment and a financial liability. Gramm-Leach-Bliley Act straightens The Community redevelopment Act and made it even easier for the bad mortgages to be created that are at the heart of this crisis. And lowering the interest rates caused a boom that comes from an increase in the supply of money and not from demand; this causes a bubble that then bursts forcing deflation witch stabilizes the market. The government doesn’t like this and tries to keep prices falsely inflated. So how do we fix it? Well if we leave it alone, it will fix it self. If we remove the oversight and regulation and government manipulation of the interest rates we will prevent a future bubble. Yes, I know that will never happen, but you can’t say capitalism doesn’t work if we never truly tried it. If we do nothing and let the current market sort it self out I don’t know how bad it would be, but it’s clear that no one including Bernanke and Paulson know either. What I do know is that the great depression was caused partly by limiting currency so limiting currency is not what we should be doing, and we obviously are not. Bernanke is a student of the great depression, but I fear he may be going to far the other way because the second thing I know is that printing money and lowering interest rates lowers the value of the dollar and raises the price of oil and in turn food. If people are poor from inflation there can be no turn around. I don’t think we can win this, I think we are going to feel pain no matter how this goes down. The biggest market problems we have had were caused by government over reacting. Saving these investment banks may save our devalued money, but it does not solve the problem. And regulating the hell out of the market and manipulating it with government funds sounds less like American capitalism and more like French socialism. This bail out will not work… we are in for hard times, how long they will last depends on how much the government i interferes. I understand what the government is trying to do to save the system, but we know Newton’s third law to be true and in this case inflation is the opposite reaction. Yes, the government has intervened before to try to save the economy this is not a new concept, but there past intervention, I’m convinced, is the reason we are in this crisis.


Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man. Ronald Reagan