Originally Posted by
jungle
I think it is important to understand that the FRB is acting in a responsible way by pointing out the situation they have been forced to deal with and outlining the consequences of complete lack of control with regard to spending.
Monetary policy and fiscal policy are two entirely different animals, both must be handled well to prevent sudden surprise at the discovery of a very large empty bag.
This situation has been the subject of many warnings, but when the Fed starts to talk about it in terms of it's effect on monetary policy, action may be looming in the near future.
This makes the "credit crunch" look miniscule.
FRB acting responsible is almost an oxymoron, however I see your point. I would contend that it was monetary policy that gave license for such reckless fiscal policy. Perhaps the only answer now is to let the banks fail. We are at the point of no return, we have made decisions and we will need to pay for those consequences now rather than put them off.