The fed is really between a rock and a hard place here. Ease and the cheap credit fiesta continues, but the dollar is going to get hammered more as foreign banks head for the exits. Tighten and we’ll get a nasty deflationary spiral where both the rich and poor get poorer. Banks will fail. Wealth will be destroyed.
But I think the upcoming ease in interest rates is just going to prolong the inevitable and ultimately make things worse.
The markets need hard medicine. In the long run I think it would be better if some shaky banks failed, people got poorer for a while and had to endure hard times. The longer the easy money fiesta goes on, the more severe the ultimate crash will be.
This is a slap in the face to everyone that does the ‘right thing’, lives below their means, forgoes needless luxury items and saves to buy a home properly and saves for rainy days.
Maybe I am a fool for not jumping on the cheap money credit fiesta.
