This is the Cato Daily Podcast for Wednesday, November 20th, 2013.

I'm Caleb Brown. Large sums of cash sitting in U.S. banks and the Federal Reserve's pension

for doubling down on the last crisis is setting the stage

for yet another one.

So says Kevin Dowd, an adjunct scholar at the Cato Institute, he says the outcome, whatever

it is, won't be pretty for our monetary system.

We spoke during Cato's monetary conference held last week.

In your talk, you sort of laid out how the Fed operates and essentially if I understand you correctly it's a

continuous process of doubling down on whatever the last crisis was. Can you unpack that a little bit?

He could say that.

The point is that the Fed, we have this oscillation that gets greater and greater

and greater.

So you have, you worried a bit about the stock market,

so you prop up the stock market with the green span put.

When that goes pay-shaped and there's a crash, you do it on an even greater scale then you produce an even

greater crash and then the oscillation gets even worse the next time around and we find ourselves

in a situation we're looking at a

potential disaster. John Allison in his talk on your panel discussed the two sort

of simultaneous actions by the Fed and other regulators.

One was to dump a bunch of money into the economy and two, making commercial lending

much harder to get involved in.

Yes.

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