The Worse It All Becomes

clipped from articles.moneycentral.msn.com This week I'd like to update readers on the funding crisis. That's the third in the three-baseball-game analogy that I dreamed up last fall (read "Economy sinks as we save bankers") as a way to think through the enormous problems we faced. The first and second games (crises) -- the credit meltdown and the economic downturn -- have been pretty easy for folks to understand, as they were front and center in the news. Essentially, the financial crisis now lies behind us But therein lay the seeds for the funding crisis -- which, as I noted in my daily column at FleckensteinCapital.com on May 21, appears to have started. Because if the dollar is called into question (as now appears to have begun) and if the Federal Reserve's monetization cannot lower interest rates (and in fact causes them to rise, due to the consequences of printing so much money), then the Fed is trapped. The more it tries to solve the problem by printing more money, the worse it all becomes.