April 30, 2008

Disturbing Economic Idea

So I'm flipping through the Wall Street Journal and notice an article "Fed to Weigh Paying Interest On Banks' Reserves", and it strikes me as odd. Then I read the article and begin to become very annoyed. It seems that the idea is to pay banks for their overnight reserve requirements. Now, call me crazy but in order to do this it would seem they would have to pay them with Government money, which in my world means tax dollars.

So let me understand this, they are going to pay banks, most of which are in trouble from the subprime housing mess because they made bad loans, and for the most part were not required to own up to those loans, interest on money they have to have for deposits anyway. So not only does the Fed not let the banks fail for bad investments they then pay them with our money to hold our money. I really can't believe this could be real, I feel like I'm in an alternate universe. The reasoning is to help with the credit crisis. Last I checked you don't help a gambler overcome gambling by giving him more money after he has lost his shorts.

I can't believe this or the logic of it. If anyone has something good that I'm missing I would love to hear it.

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