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In the last few decades, when has the economy improved without the federal reserve intervening? I have to ask this because some despise the fed when it's the reason why it gave our economy some revitalization after the economy took a spiral downwards.
In the last few decades, when has the economy improved without the federal reserve intervening? I have to ask this because some despise the fed when it's the reason why it gave our economy some revitalization after the economy took a spiral downwards.
In the last few decades, when has the economy improved without the federal reserve intervening? I have to ask this because some despise the fed when it's the reason why it gave our economy some revitalization after the economy took a spiral downwards.
When has the federal reserve never intervened? The federal reserve always intervenes in good economies and bad.
In the last few decades, when has the economy improved without the federal reserve intervening? I have to ask this because some despise the fed when it's the reason why it gave our economy some revitalization after the economy took a spiral downwards.
Every time prior to it's creation on December 23, 1913.
I think modern economies cannot function either way without Central Banks providing fuel (money). Think about it, if somebody's enter work force as a pizza delivery guy, Central Bank (in convoluted ways) must create $15k/year just for him. If new money for pizza man is not created, his paycheck is made up from the money already in circulation (in other words, you are getting little tiny bit cash poorer with every pizza men getting a job, or you are losing a job so pizza men could have theirs). If for employment to grow, central banks must create 6,000,000*50,000 = 300 billion$ at least, otherwise 300 billions must come from the money already in circulation (i.e. you and gosh forbid people with serious money to their name are getting poorer). That what FEDs trying to do each time to stimulate economy and employment - inject money for potential new paychecks.
Unfortunately, FEDs "create" money by pulling bits and zeros from their arses and lending it to big banks etc.. Big banks, lend new money to big investors and industries. Big investors and industries take new big loans out only if they are "sure" (+/-) that they pay loans + interest back. Keep in mind that the word "sure" is not strictly rational category. "Economy" to large extent is "irrational" and "herd" like. It was not rational thing to expect home prices to grow to infinity and beyond in short amount of time, but that's exactly what big investors were betting on, why?, because "irrationality" was in the air, a big herd of investors was running, it was tempting to join a big herd and to come to the watering hole first (i.e. to cash out) before the rest of the buffalo would reach a watering hole.
Every economic boom is just like that, irrationality must be in the air, you must know that the rest of the buffalo is joining the herd. If irrationality is not in the air, FEDs printing $ doesn't do any good. Banks don't lend and investors don't take loans out. What triggers irrational binges? That's an interesting question. My guess "a promise" of some sort. A promise of computers or a promise of getting rich by flipping your house.
Another example, let's say you and Ms. X went to an industry convention in Las Vegas. One night you felt particularly frisky and adventurous and you boosted American GDP by $500 by ordering an expensive hooker. The next night you discovered that you and Ms. X have so much in common, why pay $500 for a hooker, when you can get honey for free? Bang, American GDP shrank by $500 in a blink of an eye. According to Econom 101, the amount of money in circulation should match amount of goods and services denominated in current prices. But in practice that just impossible especially for "service economies" where everything and everybody is for sale on a whim.
To summarize, Economics and money supply is not science, it's not even an art, it's just tossing a coin and expecting the best. So far, "the best" was elusive because there is no another hyped up watering hole for buffalo to run to.
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