David R. Henderson  

The Beatings Will Continue Until Morale Improves

Summers vs. Goolsbee... Tyler Should Bet Against Obama...

The New York Times today carries a story about how the Federal Reserve Board is making decisions about who gets loans and who doesn't. The reporter, Edmund Andrews, writes:

But the financial crisis has drastically changed the role of the Fed, forcing officials to get their fingernails a bit dirty.
Since March, when the Fed stepped in to fill the lending vacuum left by banks and Wall Street firms, officials have been dragged into murky battles over the creditworthiness of narrow-bore industries like motor homes, rental cars, snowmobiles, recreational boats and farm equipment -- far removed from the central bank's expertise.

Note the author's use of the word "forcing." This is one of the most misused words in reporting and, indeed, in modern conversation and writing. No one forced the officials to do what they're doing. They chose.

Here's the passage that led to this post's title:

Fed officials say they, too, are uncomfortable with their new role and hope to end it as soon as credit markets return to normal.

Umm, do you think there's any connection between the Fed's role in allocating credit and the credit markets not returning to normal?

H/T to Alex Tabarrok.

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CATEGORIES: Regulation

COMMENTS (6 to date)
Mike Rulle writes:

I lazily read blogs for a couple of hours a day. Then when I get to something like what Dave has written above, my blood starts to boil. Because he is obviously correct. It drives me crazy how the media (let alone the reality of the Government's actions) has just fallen in lust/love with the narrative which Dave has critiqued.

"Markets have broken--and like Scotty in Star Trek--the federal government has to roll up their sleeves and get the job done". They need to "fix" the markets and the economy.

It is preposterous. This is derivative of Obama-mania. This narrative started with Paulson/Bernanke--which shows us just how far the Republican party had fallen--but its true "ideological leader" is Barack Obama.

For whatever insane reason, I still am optimistic this will be rejected ultimately by Americans.

ed writes:

So Mike is blaming Bush/Paulson/Bernanke's actions on "Obama-mania?" That's a bit hard to swallow.

Although I agree that the Republican party has fallen pretty far.

Government motto:

We don't know much, but we are willing to guess and direct everything, for the common good.

Mattyoung writes:

The Fed is acting as if there was some suddenly discovered accounting fraud in the use of credit in 2008, and they must fix the problem. The alternative hypothesis is that there was the sudden adoption of better technology to manage the flow of goods.

The implication is that under the later hypothesis, the Fed is forcing us back to the past, to older less efficient technology, making the adaption process much less efficient.

Devin Snead writes:

The quote about the Fed being "uncomfortable with their new role" made me laugh for awhile.

Les writes:

I think Mike is right on target. I only wish I shared his optimism - I see no light at the end of this very long tunnel.

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