What is wrong with Bernanke? He and Paulson must be the only people in America who think we don’t have enough debt. Our financial problems are not the result of a lack of credit. But today he unleashed $800 billion to “unfreeze” (other known as thawing) credit markets.
The problem is with the financial system is not a lack of credit. The banks have money, but they are sitting on it. People don’t want to make investments when they are this concerned about the overall situtation with the economy.
The problem is not liquidity. The problem is uncertainty. Just yesterday the Fed had to rescue Citibank. That doesn’t instill the confidence necessary to take risks. Until we have more confidence in the economy, credit markets are going to remain frozen. The Fed can do whatever it wants, but it won’t matter (other than hurt us down the road when inflation takes off because of the Feds actions).