Short-term solutions do little for economy

The Federal Reserve is issuing $200 billion in loans to investment banks in exchange for bad debts, allowing the banks to put up bad investments as collateral to borrow money they will use to invest.

It’s no surprise that most of the so-called “bad investments” are sub-prime loans that banks made during the housing boom.

At the end of 28 days the investment banks will have to repay the loans.

This is a facade used to make the private investment banks look more profitable than they really are. This angers me because the people that the banks preyed upon and issued these loans to are the ones that are losing their homes. Where is the government help for them?

The Federal Reserve created the $200 billion out of nothing. The credits are transferred to the investment banks; the money is not backed by gold, silver or any commodity.

Pumping $200 billion into an already struggling economy that is so close to hyperinflation is a bad idea.

The stock market responded well with record gains, but is that worth devaluing the dollar by putting even more money into the economy?

Basic economics tells us that creating more money causes the value of the dollar to go down.

This creation of money has driven up inflation since the inception of the Federal Reserve in 1913.

As long as it continues to pump money into the economy we will experience high rates of inflation.

These short-term solutions do little for the long-term economic outlook.

Matt Chambers, Anderson

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