A good treatment of the issue of the Fed handling crisis management for banks. Unfortunately, the fundamental problem with all of that debt floating around, and trying to ‘stimulate’ the economy is that the use of debt to create money is actually theft from the future: it is promises made that must be repaid by the use of resources to go to jobs to buy cars to go to jobs to go shopping for clothes to go to jobs. When people stop going to jobs or shopping or buying cars (making promises), then no amount of QE will keep the shell game going. When government creates debts through poor decision making, the problem is multiplied by the inverse of the tax rate. In order for government to pay back $1, they have to stimulate $4 in activity to get the tax money (plus interest). Most of it being on the backs of the future’s people, not present actors. When we allow banks and stock companies to manipulate interest rates and investment based purely on spreadsheets, then they become twice removed from the effect on future people, making choices based on immediate profit. They become thrice removed when loaning to the government. Government then encourages a certain rate of inflation so that its debts are easier to pay, and bankers encourage more government ‘spending’ to increase their cash flow.

There really isn’t anyone driving the ship of state to a useful end (contribution to the world itself). The Invisible Hand steering the boat is chasing the money blowing over a waterfall to depths it cannot fathom.