USA Federal Reserve Bank absorb crisis? More likely it spreads it further

I did like the word 'instability' in the post 'the instability in our financial system in contained mostly in these four banks…' in shopyield.com website, and straightaway the thought connected in my mind with chaos, but not the chaos synonym of mayhem and destruction which every mind is conditioned by the prevailing values in societies today but the chaos which brings about new attractors new ways of looking at things, the chaos which translates instabilities into bifurcations, bifurcations which lead to new attractors, new ways at thinking about things.

Instabilities and bifurcations as they are looked at by the systematic and reliable approach of individuals who are not biased or straitjacket their search, on what their search will bring about, that they have not put any bars, any limits on what their search, and use it constructively to reach in conclusions.

A furtive Google-search on 'instabilities and bifurcations', is enough to bring about what the Fed is actually doing and

I read from the forward of the paper 'Second International Symposium on Instability and Bifurcations in Fluid Dynamics'

"Hydrodynamic stability is of fundamental importance in fluid dynamics and is a well-established subject of scientific investigation that continues to attract great interest in the fluid mechanics community. Hydrodynamic instabilities of prototypical character are, for example, the Rayleigh–Bénard, the Taylor–Couette, the Bénard–Marangoni, the Rayleigh–Taylor, and the Kelvin–Helmholtz instabilities. A fundamental understanding of various patterns of bifurcations such as identifying the most dominant mechanisms responsible for the instability threshold is also required if one is to design reliable and efficient industrial processes and applications, such as melting, mixing, crystal growth, coating, welding, flow re-attachment over wings, and others."

Hydrodynamic stability, in fluid dynamics both concepts have direct counterparts in societies economic structures state economies despite each developing in different contexts. The instabilities mentioned in the extract, bringing about bifurcations, and by carefully studying the bifurcation patterns aiming to find out the mechanisms that trigger the bifurcation. At what threshold of the instability the bifurcations are triggered. To what avail? Their purpose, to design efficient and reliable industrial processes.

Certainly the fed, despite having as its goal to bring about stability in the economy, appears as it is lost. They don't know what they are doing. The sought after stability in the economy they so eagerly want can not be seen, not even a glimpse. Why?

First, the systems referring to fluid mechanics are isolated, carefully planned and even so the ensuing complexity is enormous. Whereas the systems economy are not isolated, they are open. Myriads of factors exert their influence, beyond the narrow boundaries of markets banks and institutions, to which they design and apply their measures.

Second, their approach is biased. Their ways of identifying what went wrong, which determines the measures to take, are not different from the system that want to fix.

It is mentioned in the article

"In expanding its balance sheet and lending commitments, the Fed has relied on methods used by the very Wall Street institutions to which it has extended lifelines. The Fed uses credit ratings to help determine what to accept as collateral for its loans, employs structured-finance gambits to protect its positions and relies on imprecise valuation models to evaluate prices and monitor its exposures."

Fed relies on methods used by the very Wall street institutions? Instead of assuming the role that supposed to have, acting like the system that wall street institutions, banks, and whatever other organisations are sub-systems within, it doesn't differentiates at all. It doesn't look from above but next to, the systems at fault, therefore any solutions offered hardly touch the cause of the crises. it lets the crisis spread amidst it.

As a result the predictions upon the effect Fed's moves will have for the state of America

"It has loads of subprime-mortgage bonds, souring commercial real-estate debt and collateralized debt obligations worth a fraction of their original value. This isn’t Citigroup Inc. or Merrill Lynch. It is the Federal Reserve."

and

"But as the economy slows, mortgage and corporate defaults climb, and asset prices continue to decline, analysts are beginning to argue that U.S. taxpayers could end up shouldering losses from some of the Fed’s moves."

which will end up

"The Fed’s lending could swell by another $1 trillion or more in 2009 ..."

By not looking at the crisis from above a supersystem, overseeing its subsystems, is not able to offer solutions that will eradicate he problem. It is what comes out of Godel's theorems. The systems which in their development advanced to a stage, a result of rules abide, have reached a stalemate as solutions can no be found within the system. Any solutions can only be found beyond the system. What the system in stalemate, is included in. In that case, the system that includes the system in stalemate being the fed. Which is not doing what it is supposed to do.