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NEWS > U.S.A. > FEDERAL RESERVE PROMISES TO DO SOMETHING IF THE ECONOMY GOES BAD AGAIN
FEDERAL RESERVE PROMISES TO DO SOMETHING IF THE ECONOMY GOES BAD AGAIN
August 31 2010
Washington, D.C. – There have been some who have said that the ongoing financial crisis is a harbinger of things to come, that it is the example of the intrinsic flaws in the capitalist system and that it is just a matter of time before things go off the deep
end. Such talk may be exaggerated especially given the recent rebound in the economy throughout the world but there is little doubt that this experience has proven that the system is flawed and susceptible to catastrophe if things are not done to keep it stable.
The epicentre of the collapse and the revival has been, understandably, the United States. Holding a quarter of the world’s money everything the U.S. does has an impact around the world. It was the subprime housing market that kicked off the recession and it was the stimulus that avoided complete disaster. The world has sat and watched and waited as the giant made its moves. It is in the American economy that we will see either our redemption or our doom, and for now at least it appears to be the former. However, things could change again and that fear has prompted Federal Reserve chairman Ben Bernanke to clarify that if things do go wrong they will try and help out.
“I believe that additional purchases of longer-term securities should the FOMC choose 
to undertake them, would be effective in further easing financial conditions.The issue at this stage is not whether we have the tools to help support economic activity and guard against disinflation. The issue is instead whether, at any given juncture, the benefits of each tool, in terms of additional stimulus, outweigh the associated costs or risks of using each tool,” Bernanke said on Friday. “The Fed will do what we can to ensure that such a collapse does not occur again and that if it does happen, that we will be there to back up investments to protect buyers and banks alike.”
The news comes as a relief to many in Washington who were concerned that the Fed would simply try and take the money and run next time.
“This is good news should they follow through with it. Hopefully really help won’t be needed if they make some small moves now but it’s good to know that they will be there if something does happen. At least that’s what they are saying now, they might change their tune when people come hat in hand,” said Scrape TV Economic analyst Michael Santino. “The Reserve is in essence a giant bank which insures bank investments against collapse. However they have limits to their resources just like any other bank and there may simply not be enough in reserve to back up everyone the next time through. There is also the possibility that the people running it will simply pack up and move to the Caymans.”
The Cayman Islands are particularly nice in February and March.
“Eventually the stress is going to get to anyone no matter how many years they’ve been dealing with these types of crises. People want something significant out of life most of the time particularly as you get older and realize that death, while not imminent, is much closer than it was. A long vacation in the Caymans would seem about right in that scenario,” continued Santino. “Bernanke seems like a nice guy and trustworthy but ultimately with all that money as his disposal you have to wonder how far you can trust him. Hopefully if things do go badly again they will be there but there’s no way to guarantee it.”
It is not believed that the actual federal reserve building will move to the Caymans, just the money.
Mike Michaels, American Correspondent
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