Sunday, October 11, 2009

Bad Practices by Ben Bernanke

After the last post I just wrote Bad Economist vs Good Economist I want to take a look at this video of Ben Bernanke. Ben Bernanke, the chairman of the federal reserve is being questioned about lending out half a trillion dollar to forgiegn institutes. Whats bad about this unapproved loan is the money was just printed out of thin air and and sent over seas without approval from congress to increase short term interest rates meanwhile devalueing the dollar and causing inflation and prices in the united states to increase. Now giving out a loan is a big risk, you are taking a risk that these failing instiutes will no longer fail and be able to pay you back with interest over time. What if this is a temporoary cure and the instutites still fail and need to deafult on those loan? Another question, if your broke, why would you lend out half a trillion dollar to another person that is broke? If your lending out a dollar to a person or half a trillion dollars to a person, wouldn't you at least remeber who you lent the money too.

*Bonus - More Bad Practices by Ben Bernanke

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