28 January 2008

The effects of cushioning

These thoughts are made as an observation or theory about human behavior. The Fed's role in regulating the money supply in order to cushion us from the natural bumps of the business cycle makes people less aware of the value of being prepared for economic downturn by saving, having food storage, and having personal food production capabilities (a small garden that could be expanded as needed). While removing the Fed wouldn't necessarily correct the problem, it would cause more people to become more secure and to avoid debt more carefully. But, people will generally favor material possessions now over financial security and preparedness.