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Monday, February 16, 2009

C Span Clip: Tremendous Draw-Down of Money in an Hour or Two

"At 2 minutes, 20 seconds into this C-Span video clip, Rep. Paul Kanjorski of Pennsylvania explains how the Federal Reserve told members of Congress about a "tremendous draw-down of money market accounts in the United States, to the tune of $550 billion dollars." According to Kanjorski, this electronic transfer occured over the period of an hour or two.

This does not bode well for our economy."

This discussion took place on February 10th, 2009.

15 comments:

Underground Logician said...

This is an unusual event. Which then shows how fragile our economy is to outside sources. Which begs the question, how could such a massive reduction of cash occur unless it was orchestrated by a consortium, or a group of nations. Also, the timing of it all, say like, during the heat of the presidential campaign?

Scott said...

It is very scary what is happening to economies all around the World. TO have money like that being withdrawn is mind boggling. You gotta wonder who really is pushing the buttons and pulling the levers behind all this financial mayhem.

Pretty crazy stuff world right now.

The Lazy Iguana said...

Yup. Money market rates are so low that you are better off with most banks savings account rates.

The money is not really vanishing. It is all still there. Somewhere.

The only way this will end is if someone starts spending money. And right now nobody is spending. This means a decline in business, which means layoffs, which means less people spending money. And so on.

Tax cuts will not help. The supply side theory says that tax cuts cause business to expand. Well cutting business tax to 0% would not do any good, as nobody expands a business when demand is dropping. If you own a car dealer - and nobody is buying cars - you do not hire more sales staff. You do not hire more mechanics. You do not order more inventory.

So that idea will not work. You have to insert money where it will be spent. Job creation is where the focus needs to be. And yes, even "wasting" money by re-sodding the national mall would create jobs. Someone has to dig up the sod. Someone has to ship it. Someone has to lay it. That means real money into real people's pockets.

Which can then be spent on cars or computers or whatever. Which means that business has a reason to hire more employees. Which means more jobs for people.

But what do I know. Probably nothing.

The Doozie said...

Obamanation is going to seriously regret taking that job....

I'm stocking up on beans and rice. Not to mention toilet paper.

daveawayfromhome said...

Did you really think things were going to get better? We're nowhere near the bottom, yet. I'm not even going to advise you to save money at this point, since many economists foresee a period of inflation ahead, which would make your cash worth less in the future (or worthless in the future, depending on severity). Buy seeds and gardening tools, if you have a yard. Buy canning equipment, maybe. Lots of freezer bags, at least (and hope that the electricity situation doesnt deteriorate to the level of most of the rest of the world).

Did anyone really think that this could end up any other way? The nation has spent the last two or three decades pouring money onto the middle-eastern desert while sending our jobs overseas, all in the worship or our true God, Money.
When the rule is that whatever will make the most money for the biggest players is okay, did anyone really expect anything to end differently. Maybe so many Mexicans come to the U.S. because it feels just like home (but with cable).

Saur♥Kraut said...

Dave, How positive! You are right for the most part, I'm afraid. You're also right about how we keep misspending. I just hope you're wrong about how bad it's going to be.

Doozie, I'd get gardening tools (as Dave says).

Lazy, All true, sadly. Tax cuts may help to a certain extent, however. After all, a little extra money is still helpful (especially in these times) and can be spent on necessities. And we still will need those.

Scott, So very true.

Underground, Good points, all! Very interesting thought about the timing of the occurrence.

Three Score and Ten or more said...

When I first read your post, I was really quite nervous, then I heard the clip and remembered that I had heard this information last year, as Underground noted, it was in the middle of the campaign and was one of the big arguments for the first TARP. My ultimate feeling is that I am glad it wasn't yesterday. That WOULD have made me nervous.

Saur♥Kraut said...

3 Score & Ten, But this still alarms me. This is the first that I'VE heard of it, and the statement was only made available on C-Span a week ago. You may have better sources than I do, if you heard of it before - or perhaps it passed me by somehow.

BUT: If this could happen 6 months ago, it could certainly happen now. And it makes me quite nervous.

Dr. Deb said...

Ugh.....

Mike said...

So much doom and gloom. Some say others were pulling those economic strings such as Soros. Don't know... but but I'm not ready to write the nation off. Instead of preaching catastrophe, I wish the president- and others- would quietly and confidently go about their business, reminding the nation of our strengths... it's called leadership. Right now he's scared the bejesus out of folks who were already worried.

Underground Logician said...

Mike:

Great comment! The politics of fear always come back to bite the owner.

Uncle Joe said...

With Doozies new diet she's gonna need the toilet paper.

Uncle Joe said...

Is it true that Ron Paul is calling for this very thing to happen to shut down the Federal Reserve?

Saur♥Kraut said...

Dr. Deb, Agreed.

Mike & Underground, But then we are left with a problem: Do we value truth and preparedness or do we want what tickles our ears? (UL, see 2 Tim. 4:3)

There is certainly the possibility that sounding warning bells may cause panic. But do we want the theatre to burn down without any warning because alarms are, well, alarming? Sometimes we have to shout fire in a crowded theatre... when it's on fire.

Uncle Joe, Let Doozie know so she can be prepared. If not, I hear that leaves are a decent substitute - as long as they're not poison ivy.

I haven't heard about Ron Paul. I'll check it out!

daveawayfromhome said...

The trick is to have a reliable alarm system in the theatre that alerts the patrons and management to the presence of a fire.
Our own alarms systems have been tampered with, and we no longer trust them, and so now have, basically, anarchy and panic.
Restore trust in the alarm system, and theatregoers can once again, enjoy the show without worry.