Anyone: re money supply growth, I'm not quite clear on how this money is being distributed. As I understand it, the Fed is lending it to banks, and over time, as the banks repay it, the Fed will just turn around and lend it out again, probably to the same banks. Is this correct? If so, I imagine the banks have huge cash flow right now, but once the Fed stops issuing new money, the banks may have some trouble paying them back, especially if the banks' investments decline in value.
Why is the Fed doing this? I've heard that it's a stimulus to boost us through any Y2K trouble, but why are they starting now? If there is trouble coming, and the money they're lending now is being put into investments that are about to go up in smoke, that doesn't help anybody. Yet I can't believe they're stupid. Does this all make sense somehow?
Fun-da-Mental |
