I don’t fully understand how what the Fed did will help in the long term. Over two days they shifted something like $70B into reserves and opened the “discount window” (I’m assuming this is what Cramer was famously ranting they should do). From what I understand, this “discount window” is to provide discounted loans to banks and investment funds who are so low on cash they cannot survive. How will taking out another loan save them? Don’t they still have to pay it back eventually? What are the terms of these discount loans they get? Isn’t loaning them money risky? Doesn’t it just perpetuate this false economic plateau? Isn’t this what we’d call “throwing good money after bad?”
I smell a rat. I feel like the Fed is giving our tax money to bank execs who will probably default and declare bankruptcy eventually, thus not having to pay the loans back. Is this possible?
