At the time of writing the NIKKEI is up 1136 points. It seems that the world is being flooded with dollars. It's true that a shortage of dollars was part of the problem - i.e. the liquidity crisis - but flooding the system, seemingly indiscriminately, with dollars is going to cause huge distortions. Free markets have their own regulation at a macro and micro level. These sorts of distortion are liable to turn some markets upside down. Imagine dropping a Hercules-full of USD from 20,000 feet over London....you'll end up with some criminals and schoolkids picking up millions and many business people getting nothing. There are similarities with what happened in Zimbabwe.
These are desperate measures. Will they work? Having tried to start the engine with an explosive charge, will it fire up and start to run, or will the crankshaft break? If you can get the engine to turn over for a while, with the inertia from the flywheel, is the fuel supply intact? Is the timing sufficiently accurate?
Probably too many analogies for one post but I want to make the point in a way that people who aren't into economics can understand.
Let's all hope that these measures do work because the consequences of failure are almost unimaginable - Iceland is heading towards having empty supermarkets and the same could happen here, in the EU and the USA. The wisest will have put an extra couple of tins in the cupboard 'just in case' and have a 'little bit of cash' in hand.
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