Wednesday, October 1, 2008

Congressman Barton needs econ 101

Barton just said that increasing FDIC insurance on savings accounts to 250,000 up from 100,000 said this has nothing to do with liquidity and the credit crunch. Hello! Hello! Anyone home in there. One major issue is that people are running to with drawl large deposits out of banks because of the fear of bank failure. The banks lend money based on their deposit base. If they lose their deposit base they can't lend as much and will be less likely to lend as their reserve requirements rise. I can't believe what these guys same at times. Definite need to send the entirety of congress to econ 101.

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