I would think that some would argue that the Fed did step in and do what it thought was a strong plan by cutting a deal to curb government spending in exchange for credit controls. The intentional loopholes were exactly where they went wrong. The general public doesn’t see those loopholes. They only read the headlines that says they shouldn’t or can’t use their credit cards and react to that. So, they should have had a strong plan, not one based on deception.
Its almost impossible for the Fed to effect, much less control, government spending. They have no direct ability and any words by Greenspan fall on the very deaf ears of elected officials. They have much more control over interest rates, although not complete, direct control. More on this in the coming week.