James K Galbraith (son of late economist John K. Galbraith) has an excellent article on the sub-prime mortgage crisis in Mother Jones. Once again, manipulators forced the Federal Reserve to bail them out when they should have gone directly to jail, with a short side trip to bankruptcy court. Of course, the Fed cannot permit them to go bankrupt because of the dire consequences of widespread economic collapse. Galbraith:

This is how the system works. Big players can, and do, put the Federal Reserve over a barrel. The Fed doesn't like it, but what can it do? Not to bail, when the markets implode, isn't an option. Too many innocents would get massacred on the way by.

Sordid necessity thus killed Bernanke's "inflation targeting" approach to monetary policy. And this leaves the true nature of Fed policy plainly exposed. In normal times, a Fed chair can pretend to follow his academic formulae. But once the air-raid sirens sound, policy isn't made on Constitution Avenue at all. It's made on Wall Street, and don't let us forget it.

Wall Street likes volatility. And so we have a system based on credit bubbles, one after the other. The information-technology bubble from the late nineties to 2001 brought us full employment and budget surpluses, but it could not be sustained. The housing bubble has kept us going ever since. It too was bringing us high employment and falling budget deficits. And it too could not be sustained.

I suppose this is one of the reasons that economics is not a required subject, either in high school or college. Most people, even if taught badly, would know that this is a shell game designed to fleece one more time the great unwashed, as well as most of the washed.

These con games will continue until the economy completely collapses or we restructure the financial system. Don't bet on the latter.