What Do You Think About the Fed’s Intervention?

March 17, 2008 09:43 AM EDT by Alexis Glick

What Do You Think About the Fed's Intervention?

This morning on Money for Breakfast I talked with Lyle Gramley, a former Fed governor, and he had a lot to say about the Fed’s intervention in the financial markets.

Gramley said the Fed has been acting very aggressively since the middle of January to help ease market turmoil. “I think it's pulled out all stops to prevent a meltdown; I don't think we should put the blame on the Fed for what has happened. I think the Fed is responding very, very well.”

“It's rather like what you face if you have cancer, and you need to take chemotherapy; you know there are going to be some bad side effects, but the alternative is that if you don't do it -- you're going to die. And I think that is the situation which the fed found itself in, it really had no alternative,” he continued.

How bad does he think things will get? “The worst case scenario is that we just get into a total economic and financial meltdown and we have no way to prevent a really massive recession. I don’t think that is going to happen, I think the Fed is moving aggressively, I think we might have to get more taxpayer money involved by getting the federal government directly involved in taking some of these bad mortgages out of the market one way or another,” Gramley said.

Watch the full interview below, he offered a lot of good information. What do you think about the Fed's intervention?

4 Comments

Nate B.

Since fall of last year, we have seen the Federal Reserve interact in the markets with the timid ness of a sick mouse! Ben Bernanke keeps giving the markets one crumb at a time instead of doing the inevitable whole cookie. Wall street continues to want more and since the Fed keeps doing little crumb cuts at a time - Wall Street is never satisfied! Who would be? Why settle for little rate cuts when you know that Ben will come back again with more? Who would want to invest in a market like this? It doesn't take a genius to understand why Americans are suffering at the pump and the grocery store. Commodities are going up and up because no one wants to invest in the shaky USD or the US stock market. Investors don't care about who's losing money just as long as they are making money somewhere.

March 18, 2008 at 7:07 am

Rob Craven

The Fed is hurting the rest of us through lower interest on our savings, higher prices on gas, and through the inevitable inflation and devaluation they are causing. Let the free market handle it and let those who made high risk mistakes take responsibility. Don't make the rest of us pay though "quite" indirect causes hoping we don't notice.

March 17, 2008 at 5:29 pm

David Williams

The concern now is the dollar. The ripple effects of a cratering currency are often subtle...like, for instance, the way in which the dollar's decline impacts the value of our markets. A musing on that front is here: http://www.xanga.com/Beloved_Spear

March 17, 2008 at 5:25 pm

Matt, Nashville

It's bad. There is no concern over the value of the dollar. The more money they print, the more worthless it becomes.

March 17, 2008 at 4:49 pm

about this blog

Alexis Glick is an anchor for FOX Business Network. Prior to joining FOX, Glick served as a correspondent for the Today Show and co-anchored the third hour of that program. Before her stint at NBC News, she was the senior trading correspondent for CNBC and reported from the floor of the New York Stock Exchange.
- Contributor Profile

What Do You Think About the Fed's Intervention?