Despite reasonable criticisms of the FOMC for being in bed with financiers and the capitalist class in general, we should realize that in the current short-run period it's in sort of a no-win situation.
(1) it could respond to the rising oil prices by tightening, raising interest rates. All else constant, this would raise unemployment, hurt GDP, and make the financial crunch even worse. (2) it could instead respond to the financial crunch by lowering rates (as it has). Though this moderates the rise in unemployment, it encourages inflation. On Wall Street, there are major camps supporting each one of these. A lot want to end the freeze up of credit markets (option #2) but a lot say "we shouldn't reward irresponsible behavior" and reject option #2. In the current (short) period, the first group of financiers (the monetary expansionists) are actually in an implicit alliance with Main Street and even the working class. On Dec 13, 2007 9:20 AM, Doug Henwood <[EMAIL PROTECTED]> wrote: > On Dec 13, 2007, at 11:55 AM, Charles Brown wrote: > > > Fed IS footing bill for lenders' crisis (that is, they will make us > > pay > > for it) > > How? And what will it cost if they do nothing? > > Doug > -- Jim Devine / "The conventional view serves to protect us from the painful job of thinking." -- John Kenneth Galbraith
