This is why the big banks should have been allowed to fail in 2007, they were loaded up with bad debts, and the only way to clear those bad debts is to let them fail. Lots of powerful people would have lost their shirts if that happened, so, of course, even more debt was created to paper over all that bad debt.
Now, because of all the money Congress and the Fed has created over the last seventeen years, inflation is running rampant, and the only way to fix that is to take money out of circulation, which means raising rates. What does that do? It makes it impossible for all the people who levered themselves up to their eyebrows in credit unable to roll over that credit.
The financial pain that would have come from the 2007 market collapse would have been bad, had it been allowed to happen. By papering it over with new credit, the pain that is going to come now will be much worse.
The toxic loans absorbed by the Fed in 2008 are still on their books. They made a good dog-and-pony show how quantitative easing was only "temporary" and they'll sell the radioactive waste when the time is right, ignoring that no sane buyer will buy Jamal and Tyrone's mortgage-backed securities.
This is why the big banks should have been allowed to fail in 2007, they were loaded up with bad debts, and the only way to clear those bad debts is to let them fail. Lots of powerful people would have lost their shirts if that happened, so, of course, even more debt was created to paper over all that bad debt.
Now, because of all the money Congress and the Fed has created over the last seventeen years, inflation is running rampant, and the only way to fix that is to take money out of circulation, which means raising rates. What does that do? It makes it impossible for all the people who levered themselves up to their eyebrows in credit unable to roll over that credit.
The financial pain that would have come from the 2007 market collapse would have been bad, had it been allowed to happen. By papering it over with new credit, the pain that is going to come now will be much worse.
The toxic loans absorbed by the Fed in 2008 are still on their books. They made a good dog-and-pony show how quantitative easing was only "temporary" and they'll sell the radioactive waste when the time is right, ignoring that no sane buyer will buy Jamal and Tyrone's mortgage-backed securities.