This past weekend, the Federal Reserve bailed out Bear Stearns, a notable Wall Street bank that was on the verge of collapsing due to losses in the mortgage market. It got us thinking about what the Fed is, exactly, and how it has come to serve as a sort of safety net for major corporations. Why was the Fed able to bail out Bear Stearns, and will it be able to keep this up? Vincent Reinhart, the former director of the Federal Reserve Board's Division of Monetary Affairs, will elucidate these questions for us today. And if you have other questions about the Fed, leave them here.
Blog Of The Nation
March 18, 2008
In the past few months, the Federal Reserve officials are trying too hard to stabilize a shaky financial market. Why don't they let the market adjust by itself? What happened to the basic economic law of supply and demand?
What are the controls on how much money that the Federal Reserve can print?
What are Non-Borrowed Reserves of Depository Institutions and what is the effect of it's current value (-17.592 billion dollars as of 2008-02-01) on the economy?
Values from this site,
http://research.stlouisfed.org/fred2/series/BOGNONBR
One of the callers cited the Federal Reserve's reduction in interest rates as the cause (driving factor) in the recent devaluation of the US $. The implication was that the current administration's borrowing, rather than taxing, to cover budgetary expenses is a less significant, if not insignificant, factor. Is that truly the case or did the caller have an incorrect (myopic) perspective on current inflationary practices.
I tuned in late but if I heard correctly that Vincent Reinhart is with the American Enterprise Institute, I do not feel, he is qualified to answer the concerns of the public at large. The AEI is an advocate for the interests of big business not the public that is supposed to be represented on "public" radio.I fear ,certain questions about the public bailing out a company that pays its top execs millions per year will not be addressed. I would like to have seen someone like Robert Kuttner of "Prospect magazine' on the show. He is genuinely concerned about the public interest
I'm no expert and probably will never be invited to speak on NPR. But I do not believe that giving the Fed Reserve more power to facilitate other financial institutes esp. since it is not under the federal government's umbrella of checks and balances. There are no restrictions for this system to become too powerful and another police puppet of such unruly Bush-like administrations.
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