Thursday, March 19, 2009

Thank God, It's The Fed

There's a scene near the end of the movie "Fletch," where the corrupt police chief (played by the incomparable Joe Don Baker) arrives in the middle of a standoff between Fletch and the movie's primary villain Alan Stanwyk. Chevy Chase delivers Fletch's reaction with a deadpan:

"Thank God, it's the police."

That's pretty much how I felt when I read the news the Fed was coming to the rescue with a new plan to buy securities:

March 19 (Bloomberg) -- By committing to buy Treasuries and double his purchases of mortgage debt, Federal Reserve Chairman Ben S. Bernanke signaled his determination to avoid a repeat of the Great Depression and his willingness to pump as much cash into the economy as needed to end the current crisis.

U.S. central bankers decided yesterday to buy as much as $300 billion of long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion, aiming to lower home- loan and other interest rates. The Fed kept its main rate at almost zero and may keep it there for an “extended” time.

The moves sparked the biggest drop in 10-year Treasury yields since 1962, rallies in the stock market and gold and a plunge in the dollar against the euro. Economist Richard Hoey said Bernanke has created the "Rambo Fed," referring to the Sylvester Stallone character skilled with weapons.

Aren't you the same guys who helped get us into this mess in the first place by playing too fast and loose with the money supply? And now you're going to save us with more mad money?