Wednesday, November 26, 2008

For what its worth

For those of you interested in economics and who read my blog on our current crisis, I just discovered this tidbit:

In August 2007, the Federal Reserve Bank had assets of $850 billion. The Fed buys assets like U.S. Bonds, and now "asset backed junk" with "fiat" money. That's how they "print" money. As of last week, that figure totaled $2.2 trillion — nearly a threefold increase. Yesterday they announced another $800 billion spending spree. Remember the multiplier effect of cash in a bank?

Will it cause inflation? Yes, eventually, but only when the economy gets started again. Nothing changes.

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