icandoitdon

Central Bank Rates Around the World

the fed almost never gets it right. they're incompetent and here is why:

the fed has consistently erred on the side of easing whenever it apeared that the economy might enter a soft spot. always. why have they done this? because they see their primary mission as promoting growth, which is flat out wrong.

there is nothing more important than the stability of the financial system. this requires a sound banking system built on sound lending standards, adequate capital requirements, price stability and a price of credit commensurate with the degree of risk assumed. the fed was virtually asleep at the switch when it came to this simple but vital regulatory mandate. it cared only about the availability of cheap money and lots of it while ignoring the effects of subprime lending and related standards, the practice of securitization that shifted the risk of lending to unwary investors, and the emergent risk of derivative financial instruments with a myriad of counterparties that companies themselves often don't understand and cannot even quantify. many are off balance sheet, with investors blind to the land mines that exist in financial and non-financial companies alike. it took years for the full effects of these to come to fruition and the fed did nothing until it blew up in their face. and their initial response was...more cheap credit. incredible.

the steady decline of the u.s. dollar and the parabolic spike in key commodities that have been ongoing for several years now is very much a function of the loss of faith in our financial system. this belongs directly at the doorstep of the u.s. government, including our incompetent federal reserve.