"The government has introduced a pair of new programs that will provide $800 billion to help unfreeze the market for consumer debt which Treasury Secretary Henry Paulson calls vital to supporting the economy. "
Several weeks ago there was a huge congressional vote on $700 billion to prop up banks. Where is this extra coming from? WHy no vote on it? I don’t get it.
The additional money is coming from the Federal Reserve, which has heaps of money and can essentially lend it as it sees fit. The original money came from the Treasury, which has very little money but can issue T-bills and can spend only at the behest of Congress.
The purpose of the FR is to fine tune the economy- to rein in growth (to check inflation) and to encourage it (to check stagnation). Congress isn’t in session most of the time, and somebody has to be around to adjust lending rates on a daily (or even hourly) basis; that’s why the FR only has Congressional oversight in a broad sense.