Holy COW - Ethan thanks for keeping me in the know - cause I HAD NO IDEA! That is really crazy man - do you think this is a smart move by our US government? Wow….

The crazy thing is that the Federal Reserve is not really apart of the US Government. It is designed to be independent from any branch of the US Government, at minimum to avoid political biases in Fed decisions. However the Fed does get pressured at times from Congress to take certain actions; and the Fed chairman is selected by the US President. Anyways, any decision the Fed makes, like the two I mentioned in WSYK#5, are decisions made by the Fed, not by anyone in office.

In regards to your question: I have no idea if this is smart or stupid. Currently, the lots of people in the finance industry deem this to be a good thing, and it has helped and will continue to help add stability and create confidence in our financial system, which is exactly what we need to thaw the credit freeze. As for the long term, who knows.

In a related issue, on Monday, Treasury Secretary Henry Paulson (left for another day on WSYK) came out with sweeping proposals on ways to reform our entire US financial system, including giving more power to the Fed. If your interested there’s a decent article here: http://www.theglobeandmail.com/servlet/story/LAC.20080401.IBPAULSON01/TPStory/Business

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