GM and Chysler Bankruptcies

[kandrathe]

I'd be more worried about actually getting an upturn in the economy. But, if growth, employment and the money supply all start going up, then first, you uncork a bottle of champagne, because you just saved the economy. Then, you let the Fed do its job and adjust interest rates to keep inflation in check. So long as the economy is growing and inflation is positive, monetary policy works.

At some point, though, the $1.50 loaf of bread will raise to $3. Or, your celebratory champagne will go from $20 to $40. Wages will try to catch up, and people on fixed incomes will suffer.

I'm afraid that the Fed, as much as they might try, will not be able to contain the raising costs of production and materials. Currently, with interest rates set at zero, we see the Fed with the gas pedal tromped to the floor without much movement. I'd suggest that there is too big a burden on the economy inhibiting forward movement. That burden is debt, both the governments, and the peoples.