If there is a theme running through this article, it is "disingenuousness". Having read and heard much Mr. Hlinka has had to say in the past, I regard him as too intelligent, too knowledgeable to have simply erred. This passage in particular struck me:

"During the early years of this decade – in the wake of the 9/11 attack – the Federal Reserve started slashing interest rates. The belief was that this would help the economy GROW (my emphasis). For a time it looked like things the plan was working. The housing market was running on all cylinders and the stock market soared.

But we NOW (my emphasis) know that this was all an illusion … the economy was inflating rather than growing."

It borders on hypocritical, even just plain false, to criticize Obama's plan for answering to political expediency, while refusing to acknowledge that the problem was actually caused by placing political expediency ahead of every other value to begin with. In fact, your own analysis seems to put political expediency (your own) ahead of sound reasoning.

The Fed was not actually hoping for "growth" in the economy, so much as growth in the stock market which might conceal weakness in the economy. And those of us who chose to look at the situation through a lens free of political filters knew back in 2002 that the "growth" was an illusion created in large measure by the policies of the Federal Reserve.

In other words, economic policies are always subservient to political philosophies. I question whether such a thing as "economic policy" actually exists outside of political circles. It might be true that Obama's plan carries a political message; so too does your critique.

I agree with Michael, and would add that our consumer culture has created a society that can't live within its means. We will not resolve our economic woes until we get back to "saving for things we need", versus "taking loans for things we want".

As much as I admire President Obama for his intelligence and his determination to fix the world, I'm concerned by the swiftness and strength of his reactions. I remember the Pogo strip words, but in these times I'm thinking that it's like we're all in a car and it's skidding. Instead of gently pumping the brakes and relying on the ABS, someone is slamming on the brakes and we have no clue where we're going to end up - never mind that we cant see the poles and trees along the side of the road.... I think the cheap money issue has now become history - our skidding car now has a mind of its own. Until it hits something, or simply stops....

Michael,

So, you think Obama should take away much of the Fed's ability to control the money supply? Why? Do you think that legislators or the executive (read: politicians) should control it?

Are you arguing that the US Government should influence the economy without monetary policy? That would leave only fiscal policy: regulation, which you seem to altogether dislike.

Or are you pulling a Peter Schiff on us by suggesting that the US should revert to the gold standard?

You observed correctly that the real reason why the money markets collapsed is because underwriting standards were "weak". But, to be more to the point, the underwriting was utterly incompetent and irrational, and that's because underwriters' hand was forced by the avarice of a few key players (e.g. Bear Stearns). And this climate emerged precisely after the point at which Bush's administration deregulated that part of the financial sector in '05.

Behavior like that of Bear Stearns, etc., is the reason why the private sector will never self-regulate properly. AS you know, business ethicists widely theorize that the private sector would recognize that it's in its best interest to self-regulate, because otherwise the government will step in and impose its own regulation to the possible detriment of private interests. Yet, the reality is that private interests never behave like game theorists expect: they aren't rational and they don't strategize for the long run. So, governments need to impose regulation after all.

Allowing the attacks of September 11, 2001 to trigger an economic collapse would have encouraged terrorists, by making their crimes more effective. A rational response to economic downturns is to stimulate the economy to promote the effective use of resources you do have, without encouraging the wasteful consumption of resources you don't have. One of the obvious ways of achieving this, though, is excoriated as 'protectionism', so it's not really surprising that the tragedy of war ends up being the only thing that lifts countries out of the troughs of the business cycle.

Since when do private interests truly look after public interests. The human tendency is to look after one's self first. The Fed which is really controlled by bankers lending money to the government who lends the money back to the banks is nothing but usury. The Fed should be nationalized and taken back for the people. BTW how many of Obama's team is from Wall street. Is anything going to change? The fox is not only in the hen house, it's nesting with the chickens.

Michael clearly understands the problem.

Learned this in the great depression too. who says history does't repeat itself.

How can economists and 'experts' continue to ignore the growing inequality in North America as the majority of Canadians have experienced a stagnation and decrease in their real wages. We want to focus on institutions without talking about their real consequences to the day-to-day lives. And this underlying cause, the North America economy's dependence on a growing consumer economy without increasing the wages of the majority of consumers led to a debt-financing culture. And the `solution` of economists and experts is now to go to the hardest hit from any economic downturn and ask for `consessions`. And if we have politicians who are concerned about how the economy performs for the masses and not just for the wealthy the experts will toss around the `dirty word` of populism.

While I agree that Michael's message could be viewed as a political statement, he is indeed correct about the availability of cheap money. However, is there perhaps several important and bigger issues that no one wishes to talk about? In fact, I think there are three primary issues.

1. The US Federal Reserve is a consortium of private national and international interests. Are they acting in the best interest of the average American or their stakeholders?

2. The nation debt of the US, and the debt it has sold internationally, in particular China. What happens if China dumps the billions it holds?

3. Irregardless of all these changes that are made, the US had shed MILLIONS of jobs. Not thousands, MILLIONS. Even if these people get new jobs, who will want to buy anything? How can someone who's lost their job, gone into further debt into the thousands, be even interested in spending when they need to get back on their feet again? Will they have the same amount of disposable income? How long will it take those jobs to come back - and will they be the same kind of jobs that paid as well?

A lot of questions - and the future of the US as a financial powerhouse isn't good. The answers to all are

I don't have a lot of confidence in Michaels opinions anymore. Or for that matter, just about any financial adviser.

Clearly, they are clueless as the recent developments have shown.

But that was all illusion? Excuse me? Money is tangible, it can be counted to the dime. If you didn't see this crash coming then you don't know anything about finances and shouldn't play like you do.

There is too much greed. Period. But you won't ever hear that from a financial adviser.

Where was your good advice 5 years ago?