The Realist

A Magic Multiplier?

Wow, people still follow Keynes? He has a lot of good quotes but economically he has been refuted over and over.

You probably believe that the stimulus package worked!

The reason your multiplier does not work is that the banks have already lent this money out, now the $700bil will be used as capitalization for those loans. Furthermore, there is absolutely no proof that they will lend money out.

The Fed has already purchased these instruments from the banks, just not permanently. All those loans the Fed is making to these banks with this garbage as collateral should have the same effect...but it is not.

I do love Keynes' quote that in the long run we are all dead. Although I think most people in this country wished that in the short run all the bankers had died well before this happened.

The way to fix this is to make those responsible pay, and pay dearly so that there is a deterrence from this happening in the future. Sometimes the old Soviet way would work best. I am sure this would not happen ever again if we lined up all the Investment Bank CEOs, CFOs, added in the home builders and mortgage companies guys and put them down like rabid dogs.