I have been predicting to my students that Bernanke’s next move at the Fed would be to purchase government securities on primary market, and it seems that the Mad Crank has not made me a liar. The AP tells us in breathless praise about the Fed’s announcement it will purchase $300 billion of government long-term securities and spend another $750 billion on worthless Fannie and Freddie mortgage securities.

This article by Jeannine Aversa tells us that the Fed is being “bold,” and the following quote says it all:

“This is going to help everybody,” said Sung Won Sohn, economist at the Martin Smith School of Business at California State University. “This might help the Fed put Humpty Dumpty back together again.”

Further down, Aversa writes: “Where does the Fed get all the money? It prints it.” And that is written as praise.

Actually, Bernanke is not channeling Humpty-Dumpty. Instead, he is channeling The Onion and its satire last year about the nation demanding a new bubble.

Not to be outdone by The Onion, the New York Times gushes with praise in telling readers about the Fed’s actions, as though printing money really is the answer. Of course, there is the ubiquitous quote by an economist that those damned savers are the problem:

Jan Hatzius, chief economist at Goldman Sachs, said the Fed had adopted a “kitchen sink” strategy of throwing everything it had to jolt the economy out of its downward spiral.

But while Mr. Hatzius applauded the decision, he cautioned that the central bank could not solve the economy’s problems by expanding cheap money.

“Even if the Fed could make interest rates negative, that wouldn’t necessarily help,” Mr. Hatzius said. “We’re in a deep recession mainly because the private sector, for a variety of reasons, has decided to save a lot more. You can have a zero interest rate, but if you just offer more money on top of the money that is already available, it doesn’t do that much.”

Fed officials have been wrestling for months with the fact that lenders remain unwilling to lend and borrowers are unwilling or unable to borrow. Even though the Fed has been creating money at the fastest rate in its history, much of that money has remained dormant.

The Fed’s action is an expansion of its effort to bypass the private banking system and act as a lender in its own right.

The Fed and the Treasury are starting a joint venture this week called the Consumer and Business Lending Initiative in their latest effort to thaw the still-frozen credit markets. The program will start out with $200 billion in financing for consumer loans, small-business loans and some corporate purposes.

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.