Will one trillion dollars help the economy?

The lead story in The New York Times today was titled, “Fed Will Inject $1 Trillion More to Aid Economy. “  The Fed will accomplish this by printing the extra money and buying treasury bonds and mortgage securities.

According to the article, the fed’s decision doubled all of its measures from last year. It was designed to  lower interest rates for loans and thus encourage more economic activity.

Wall Street seemed to approve of the move by gaining over 90 points. But to me, it represents just one more indication that things aren’t going very well. One reason for the Fed’s move was that it could no longer lower its own interest rates to spark activity as the rates have been lowered so many times already, they’re hovering near zero.

And it also gives an indication that the other methods we’re trying aren’t working very well either, otherwise such a drastic action would be avoided, especially by the ultra-conservative Fed.

The whole situation reminds me of a sand castle. Sure, you can build some walls around the castle and hold off the tide, but it’s only a temporary measure. Eventually, the tide will break through the walls, and the castle will be doomed.

In the same way, the U.S. economy is too large to be affected by our fiscal and monetary actions, and the size of our problems will overwhelm even our boldest solutions. The tide will come in and hopefully, it will eventually go out again.