Thank you Krazy, for a counter viewpoint to the usual ranting and raving. The jury is still out as far as i'm concerned re Bernanke. but so far he seems to be rather better at his job than we later found out Greenspan was. There was never any doubt in my mind that the deficits would be monetized, so it comes as no surprise that we can expect some fairly substantial inflation down the road, though i think hyperinflation is avoidable. The situation with the illiquid assets the fed is taking on isn't nearly so bad as generally supposed -- somewhere between 3 and 11% is the correct devaluation for these assets, not the huge writedowns that an illiquid market and mark to market accounting has forced. Three things are urgently needed to bring deficits under control: jobs, greatly decreased military spending, and substantially reduced medical costs. Progress is being made on only two of these fronts, so far. I expect social security to be put on a sound footing this year, and that will be a help but S.S. is not a serious problem as it is trivial to fix. Reducing military spending and medical costs will be a political nightmare, but it seems the Obama administration might just be capable of pulling this off. Let's hope so.
Keep in mind this is not Tim's plan: the fed has been buying the "toxic" assets for the past several months, including siphoning things off of Fannie's books. This announcement from treasury just shows me that they are taking their cues from the Fed.
That's right, throw the good money after bad! It's like averaging down in trading. You are adding more money to your losing position!
Bernanke is doing what he's paid for, running a central bank. He's not being paid for being your best buddy nor running things the way you like. Don't like it? Leave. There are 150 something countries out there. During the last 400 years, millions of people all over the world left Europe and Asia to come to the US because they didn't like the way their government was running things. Unfortunately, their children and grandchildren have become wussies that just know how to whine and complain without having the balls to pack up their stuff, relinquish their passport and start over somewhere else.