Wednesday, August 1, 2007

More on why the Fed and Wall Street is a rigged game

Like Mish says, the Fed never has trouble with inflating bubbles, just deflating ones. Here’s his own words:

Essentially the Fed views a falling market as a threat. Of course a rising market, no matter how reckless or speculative is not a threat. Such is the nature of the misguided policies of the Fed that constantly blows bigger and bigger bubbles to cover up its own mistakes.

This is of a piece with New York Stock Exchange’s shutting down computerized trading programs whenever stocks drop too rapidly in a day, but letting them run wild in an uptick of the same percentage, as I posted here.

The question is, will Democratic presidential candidates address how bad Greenspan was about this? Will they pledge to hold Bernanke’s feet to the fire of a different policy? And, what about Congress? Will we get action, not fluff?

Cross-posted at Socratic Gadfly.