Dr. Housing Bubble 07/09/08

[Crewleader]

The Psychology of Ben Bernanke: The Great Depression was caused by the Federal Reserve. Was he Talking About the current Great Depression that is Sprouting Under his Watch? Lessons From the Great Depression: Part XIII. The Federal Reserve.

Federal Reserve Chairman Ben Bernanke this week once again mentioned that the Federal Reserve was “strongly committed” to financial stability and is considering options like keeping the lending facilities open to primary dealers. In short, they are going to continue to bailout banks and Wall Street firms while Americans get the shaft. This is an important statement and the futures markets are now tenuous of any rate rises this year. After all, we are now firmly in a bear market with the three big index players, the DOW, S&P 500, and NASDAQ down 20+% from their recent peaks.

It is crucial to understand the psychology of Ben Bernanke in order to understand his motives in the current economic crisis. Bernanke is a student of the Great Depression and much of his belief is that the Federal Reserve was a main (if not primary) cause of exacerbating the problems at that time. He feels they didn’t react quickly and strongly to stem the economic collapse that soon followed. Yet many Americans aside from pop culture and what is the hot item at Wal-Mart don’t really have a sense of history. For example, many think that the Great Depression was purely caused by one bad month in October. That is not true, the bottom didn’t hit until years after. Also, many forget that we had a massive real estate bubble that occurred in the early to mid-1920s with Florida real estate looking similar to what is occurring again in the coastal states in particular, California and Florida.

The Federal Reserve was initially envisioned as a lender of last resort. Economic busts and depressions were very common in the past. The idea was to have a central authority who would be able to step in during these moments of crisis to inject some liquidity to prime the pump and get the system going again. But make no mistake, it was designed to be used as a very last resort only when things got absolutely horrific.

http://www.doctorhousingbubble.com/ben-bernanke-the-great-depression-was-caused-by-the-federal-reserve-was-he-talking-about-the-current-great-depression-that-is-sprouting-under-his-watch-lessons-from-the-great-depression-part-x/

[MannyGoldstein]

1. The Fed Belongs To The Banks

A majority of the Board is appointed by the banking industry. Very few people realize this.