A Ledgie wants to know: Economy Edition

[HejiraNYC]

Originally Posted by strandinthewind

I do not think it is a loan. I think the Fed backed the obviously troubled debt. So, if that debt does what they think it will and goes bad (if it is not already there) JP Morgan is not responsible. So, the Fed is only on the hook to absorb the losses. If the losses do not happen, which appears to be unlikely, then JP Morgan gains an asset. So, I think my use of the word "loan" was a mistake. I could be wrong though. The deal appears quite complicated and the entire then is not out yet, but likely will be if Bear Stearns accepts the deal, which it may not BTW.

Oh, it is definitely considered a "loan," on top of the $200 billion "loan" pumped into the Fed last week. And this is on top of the billions already "loaned" to Wall Street over the past six months. But then again, I don't know where all of this money goes or how it is "packaged" and sold off. It just seems like monetary supply is always growing bigger and bigger, and that any financial problems are simply inflated away these days.