The Fed can't correct downturns and can't even create a booming society because it can't stop inflation anymore either.

I hope the banks do take a greater interest in the real economy, but not with so many toxic loans as last time. Thanks Tony.

So, bonds are now used as collateral and demand for them is massive. QE can't continue to buy scarce treasuries or we will have negative bond rates Negative bond rates is much worse than negative IOR. So, until bonds are banned as collateral, balancing the budget would only drive bonds into negative territory, much like continued QE would.

But keeping GDP up would at least prevent future meltdowns. Also, the Fed could finance infrastructure with base money, making the payback of that financing interest free. That would go a long way toward making the US whole again.

What if banks think they can't make money funding non energy projects? Won't that slow the entire economy? Just wondering, Tony.

How could banks possibly comply with the concept of ending operations when derivatives are in the multiple trillions of dollars for each bank? I just need to know more because this looks like a fools errand, although I will say that the late Bill Seidman has said that the banks could be taken into receivership no different than always.

Alexa, this is my new article on the subject. Liquidation is the Fed's way, and it appears to be that way no matter what time in history we are subject to it: www.talkmarkets.com/.../fed-great-depression-and-great-recession-liquidations-go-unexplained

I think it is a conspiracy. Others think it is more benign, but still are astounded by it. But I lived in Reno and Las Vegas and saw the economic devastation first hand. This was no academic exercise, Alexa. I hope to have another article going into this subject further. This may help a little: www.talkmarkets.com/.../proof-the-federal-reserve-was-responsible-for-the-housing-bubble-and-crash

Good question. They make war, and regime change, in the middle east and cause friction between the nuclear powers that can destroy the world. They caused the mispricing of risk through adopting Li's Copula and that caused the securitization part of the housing bubble. Then, when GDP dropped, Bernanke allowed the liquidation that Andrew Mellon either spoke about or was paraphrased by Hoover. Liquidation is what central banks do to protect the banks. It is evil and unncessary and hurtful and people died and divorced because of it, not counting all the abandoned pets and hurtful stress this liquidation of stocks, labor, small business and real estate that resulted.

But in times of real trouble, you may have trouble spending it and you certainly cannot eat it.

They will have to step up stock buybacks to keep the charade going.