Take that, market forces!Ben Bernanke:
The Fed chairman batted away suggestions that it would have been better to let Bear Stearns go into liquidation, to punish it for poor investments in sub-prime mortgages. He said that, "with the very glaring exception of the 1930s, the Fed has been an eff-ective market stability regul-ator".He added: "At the time of the Depression, liquidationist theory was supported by the Treasury, and it was partly on the basis of that theory that the Fed stood by and let a third of the banks in the country fail. The financial stability that was not addressed was a major contributor to the Depression, not just in the US but abroad. Today we will not let prices fall at 10 per cent a year, we will act to keep the economy growing and stable. There are very great differences between the 1930s and today."
The state is setting prices, something "
command economies" do, and the results aren't pretty.
posted by Quiddity at 4/02/2008 09:51:00 PM