tag:blogger.com,1999:blog-8229908003295493558.post1771273757465900245..comments2023-05-07T00:22:46.530-07:00Comments on Open Source Geopolitics: The Financial Crisis and Public Diplomacyfreude budhttp://www.blogger.com/profile/15000453181225358174noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-8229908003295493558.post-78448573528929645562008-09-30T14:11:00.000-07:002008-09-30T14:11:00.000-07:00What has happened in the last quarter century is t...What has happened in the last quarter century is that the central banks have become the counterparty of last resort. When people panic, the Fed moves in and provides liquidity (1987, 1990, 1998, 2001..). The question is how does this square with the Fed's original role (elastic currency d%Credit/d%Y)? Is this theoretically sound? Does this put the Fed in the moral hazard of creating liquidity bubbles (Bubble Act of 1720) that only lead to the next crisis? Is the Fed supposed to be the shock absorber of panics until people come back to their sences? Is that what they really meant by elastic currency? Is there a way to formalise this role as an automatic stabiliser so we don't have to deal with hysterical obfuscation at every crisis?Anonymousnoreply@blogger.com