Quick Fixes Damage the Economy

Once again the Federal Reserve in their great wisdom, has decided to "bail us out". This news has caused the New York Stock Exchange to rally up, with the Dow Jones, the S and P 500, and the Nasdaq all posting gains. Don't think however because the Fed is bailing us out, it means happy days are here again for the economy. Many times over the past number of years, the Fed has bailed us out. It all amounts to putting a band-aid over a wound that needs stitchings

Fed Bailing Us Out Leads to False Hope with the Stock Market

When the book on this era of the economy in the United States and the rest of the world is written, it will be a rather interesting read. Exactly how far the sins that have lead to the recent economy go back, it can be debated time and time again. The 1990s, perhaps, the 1980s, you could make a decent argument.

Yet as far as we can go back, there have been instances with someone trying to fix the economy. Or more likely, sweep the economy underneath the rug. One could compare the Fed bailing out the economy to the child who sweeps the mess in their bedroom underneath their bed to avoid picking up anything. A moderate amount of work has been done but you are not fooling anyone for any length of time.

Those in control are pressured to do something. And I'm sure more than a few people will be tricked once again that the stocks elevating will be a measure to say that things are improving. The stock market is a very minimal contribution to the overall health of the economy. Companies are downsizing, investments are not strong and not as confident as they used to be.

The long term significance of any aid from the Feds or lack there of, has yet to be determined. The stock market has bounced back and forth for the past five years. On good news, people get excited. On the slightest bad news, people panic and start selling.

If we had started to fix the economy slowly five years ago and not panicked, it might be close to recovery. Now in the past five years, potentially another twenty or thirty years worth of damage has been done. This generation and perhaps the next generation may have some turbulent times at best. Especially given the hints that the Fed bailout will not be enough to pacify most.

Stocks live and die on what the media reports and putting band aids on a body part that could fall off is what these quick fixes amount to. Hopefully we will turn around for the better.