Lots of people are running around throwing brickbats at the Fed. They are exploiting ignorance about financial matters on the part of the public. They are assigning responsibilities and playing blame games very loosely, in ways that deliberately obscure the critical roles in all that is happening, of everyone else.
The Fed didn't sign loans it can't repay.
The Fed didn't loan acres of money to deadbeats.
The Fed didn't increase its demand for money out of panic.
The Fed isn't shrinking its balance sheet drastically.
The Fed didn't stop making markets, where it normally deals.
The Fed isn't forcing anyone to up the short term dollar balances they carry.
The Fed isn't chasing every transient price movement in every sort of asset for reckless speculative purposes.
Free men are doing all of those things, all on their own.
Deadbeats are walking away from signed contracts.
Lenders are seizing collateral and dumping assets onto illiquid markets are fire sale prices.
Bankers are hording treasury securities because they don't have to hold any Basel capital against them.
Banks are shrinking their balance sheets rapidly.
Financiers have let auction markets seize up and whole security classes they created and underwrote go begging for bids at a fraction of fair model values.
Investors are voluntarily ramping their short term cash holdings at vanishing interest rates in a declining currency.
Men who can't be dignified by the title "investor" have gone from tech stock to real estate to commodity and emerging market bubbles without a pause or a blink, at reckless levels of leverage and despite appalling losses on each previous bubble.
Nobody is putting a gun to any of these people's heads, forcing them to do these things.
Now, some critics think it would be a capital plan to "corner" dollars for debt settlement, drive their value up in a bubble as big as those in oil or gold or China or Brazil, and force half the world into bankruptcy. Some probably think they'd pick up big bargains in the resulting smash, though probably the Chinese or Arabs would outbid them. And if they can't, they will huff and stamp their feet and pretend they have every right to expect authorities to help them run their corner, and pretend they are being robbed if they can't rob everyone else.
But they are jerks, transparently. Clear? Nobody's interests in mind but a narrow "book" of their own bets. They are free to bet all they like, but the Fed isn't going to contract the money supply 30% and allow a depression, just so they can shout ha ha, I'm in cash already, whoopie.
I exaggerate ever so slightly for clarity. Only on the last bit - everything before it is stone sober.
Last point. When a central bank allows banks to ramp up the money supply even when nobody wants to hold that form of money, is isn't accomodating a sharp panic demand for higher money balances. And when it is accomodating a sharp panic demand for higher money balances, people are not scrambling to get rid of their money balances.
It is quite clear which of these situations we are in. And the Fed slanderers, know it.
Even some sitting governors of the Federal Reserve Board, as well as former chairman Paul Volker are throwing brickbats at Bernanke, so we slanderers are in good company.
PS. You cannot slander a public institution, which the FED most definitely is.
Earth to Jason please blast your retro rockets before you pass Pluto....
The FED created the moral hazard, increased the money supply year over year, and put on the regulatory see no evil blinders that made this pyramiding ponzi scheme of financial skullduggery all but a certainty. Everything on your list is the certain result of expansion of credit at the hands of a lax federal reserve and has happened over and over and over and over again throughout history. Despite all the claims that it is different this time, it is never actually different this time.
Greenspan was at the helm for all of it and he is not too far gone yet for us to blame it all on him. He even used to be part of the school of economics that knew that this was the certain path to ruin.
Where is the Fed responsible ?
For not performing its regulatory function.
For taking MBS on its books in exchange for Treasuries
For now proposing to pay the banks interest on reserves held at the fed
What is the Fed responsible for - the ongoing zombification of banks, just like Japan.