by Dan Nestlerode
The past several years in the economy and investment markets have been extraordinary. We have had the deepest recession since the Great Depression of the 1930s. Banks, brokerage firms and AIG went bust, or almost failed before the great bailout. The venerable firm of Lehman Bros. actually failed, while others were merged and/or propped up by massive politician-backed infusions of cash. The predictions were dire, and the politicians flinched and bailed out the financial industry, not to mention General Motors and Chrysler.
The Federal Reserve moved to make money widely available at a nearly 0 percent interest rate. When that was not enough, they bought hundreds of billions of dollars of Treasury debt as the federal government ballooned its expenditures in the face of falling tax receipts. The sharp expansion of credit fired up the stock and commodity markets, but it did little to spur everyday economic activity