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The recent actions by the Federal Reserve to help shore up failing businesses and then a strong move to cut the interest rates by 75 basis points was cheered by the street with a big upswing in the market indices. It showed that the government and the fed is going to do everything in their power to help keep the economy from failing. But a day later, most of the gains from the prior day vanished into thin air.

Here is an interesting or rather thought-provoking analysis of these actions and what might (just might, but nobody knows for sure) be our way. This article attempts to summarize some of the various views on these actions and try to help make sense of all of this. As explained in this article, ‘Path Dependency’ hints that while avoiding a downright crash, this downturn may be rather prolonged. Time will only tell.

I am no expert on the economics or finance. But observing all these actions make me wonder, if it was this easy for the fed to pump in additional money to prop up failing parts of the system, wouldn’t most of the past troubles (recessions) be avoidable? If not, then by adding this additional liquidity, are we creating more systemic problems that would come back to haunt us in the long-term; while in the short term it may appear that the impending disaster is successfully avoided? Do these actions bode ill for the dollar value compared to other currencies? What would a weak dollar do to our companies and our economy in general?

We must think in these pragmatic terms and make sure we are not shooting ourselves in the foot before it’s too late.