From Central Bank to Central Planning?
For more than 170 years, it has been accepted doctrine that markets are not to be trusted in a liquidity squeeze, and for roughly the past 85 years, central banks have set the price of liquidity in financial markets even in normal times. Now, with America's proposed $700 billion financial-sector bailout, the price of risk, too, will be administratively set.
https://prosyn.org/xPeEqMo
BERKELEY – For more than 170 years, it has been accepted doctrine that markets are not to be trusted when there is a liquidity squeeze. When the prices of even safe assets fall and interest rates climb to sky-high levels because traders and financiers collectively want more liquid assets than currently exist, it is simply not safe to let the market sort things out.