Friday, August 10, 2007

Is FedRes Overreacting?

The FedReserve is dumping money from its reserves (hence the name) into our apparently fragile "banking system" with a little help from Europe's central bank, the ECB, in an effort to instill confidence in the credit market and divert any urge to panic.

Correct me if I'm wrong, but isn't pouring 70 billion dollars into the system between yesterday and today tantamount to panicking? I think it sends the wrong message. Our system is capable of self-correction. Overreaction to a natural change in state (correction for the subprime fiasco) only makes things worse, by interpretation.

I wonder if they'll start printing more money, next, to really shore up international confidence in our economy.


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