Sun, Mar 22, 2009 |
By Hugh Hewitt
From UCLA Professor Earl A. Thompson, writing at The American Thinker:
The FOMC to the Rescue…Finally.
The March 18th Meeting of the FOMC produced a genuine monetary shock analogous to the Roosevelt’s 1933-34 monetary expansion. After nine months of starving our economy of cash, the Committee suddenly reversed its course and decided to purchase 1.05 trillion dollars worth of government debt over the next few months. Commodity prices have jumped and the dollar has finally fallen in the world’s money market. We can, as the FOMC carries out this long-needed monetary expansion, expect an escape from the current low-level trap and return to the efficient, upper equilibrium in the near future. Stocks will correspondingly boom, real estate prices will finally bottom out, and we will see a rapid recovery from the current recession. Retail prices will, by the end of the sequence, rise, as they should have in the first place. And interest rates will dramatically recover.