Has the Fed been successful in its inflation efforts?

[Zoomie1980]

Zoomie thinks because banks aren't releasing all the new liquidity, that somehow the Fed has no control.

Sooner or later, the banks will lend. And when the new money hits the street, inflation rises, and bubbles begin.

You don't control the most economically powerful nation's money supply and not directly affect its economy. To even believe such nonsense is patently absurd.

Zoomie, you are obviously short on your economic history education. I realize you are quite stubborn, but perhaps it wouldn't kill you to do a little reading.

I read a great deal from a great variety perspectives. I follow no one's philosophy except that which I derive myself. Bubbles happen with or without government involvement. Government intervention simply distorts them but they happen regardless of what government does or does not do.

Government act at the margins. What you people fail to grasp is the Economy is a psychological phenomena of the human collective, more than anything else. Human emotion is its biggest driver. Monetary policy is, at best, a modest rudder hoping to at least alter directions in small increments buts it's like a steerman in white water raft. Might avoid a rock on occasion, but the current still takes it down stream no matter how hard the paddlers paddle.

 

[gonegolfin]

Private investment banks created leveraged paper. The government allowed it, I suppose, or even encouraged it, but in the end it was the Private sector that created it.

Allowed it, you suppose? Zoomie, the Fed has direct control over the monetary base. It is this monetary base that provides the fuel for lending. It is high powered money. Without the Fed pumping up the monetary base, this bubble would never have been created. While there were many actors in this play, the Fed policies were the root cause. Once inflationist policies were put into play, this increased monetary base found a new home as the banks were encouraged to lend.

What remains to be seen is if the Fed can reflate one more time or if they are truly out of useful ammunition. This time will come (when they are out of ammunition).

Brian