Anatomy of a Fabulous Fed Flip-Flop

[RobertB]

Anatomy of a Fabulous Fed Flip-Flop
Bernanke’s major-league monetary makeover changes everything.

By Larry Kudlow

In politics and on the campaign trail, flip-flops can be very damaging. But Ben Bernanke’s whopper of a policy flip-flop two months ago turned out to be a big positive for financial markets and the economy, and may even help reverse the sinking fortunes of the GOP.

The flip-flop itself is a tale of two Bernanke’s: On the afternoon of August 7, the Federal Reserve chair was an inflation hawk — according to the unchanged FOMC policy statement — fearful of adding liquidity to the markets. By day’s end on August 9, however, he was leading the liquidity charge, initiating a process that would help unlock the credit seize-up that started in late-July.

http://article.nationalreview.com/?q=NDQxNWFiMTA2MjdmZmZhMjE0NDQ1ODQ0ZWRhZDQyMmU=

[HisAlways]

I knew we were in trouble when they started raising interest rates like there was no tomorrow. And, I know nothing about economics.

[farmgirl]

I know nothing about economics as well, but isn't lowering the interest rates just going to delay the inevitable? If the real problem is our enormous debt and the printing of money to pay it, it seems like encouraging more borrowing is not going to pan out in the long run.:idunno

[SummerSailing81]

I'm don't know much either, but I know personally that if you spend more than you make and continue to make debt, there will come a day of reckoning called bankruptcy. Although, nowdays I don't think any individual is allowed to claim complete bankruptcy to start over with a clean slate, so to speak. The thing is with an individual person there comes a point where even credit card companies say "enough" and won't extend any more credit to you. Unfortunately, the government doesn't seem to have anyone in charge to tell them to stop incurring more debt. I agree that, to me, this seems to be putting off the inevitable economic downhill slide that's coming.

[Issachar]

I know nothing about economics as well, but isn't lowering the interest rates just going to delay the inevitable? If the real problem is our enormous debt and the printing of money to pay it, it seems like encouraging more borrowing is not going to pan out in the long run. :idunno I'm puzzled. Why did you say you know nothing about economics? :p

Issachar