Thursday, Mar 13, 2008
How likely is "if"?
The Wall Street Journal: The Fed May Run Low on Unconventional Ammo
David Greenlaw of Morgan Stanley notes: “If the situation were to become sufficiently dire, the Fed has unlimited power to monetize the economy’s debt … . They could finance the entire $10 trillion US mortgage market — and then some — via some combination of outright purchases (of the GSE-backed securities) and repo transactions (for the private debt).” Of course, that would quickly send the federal-funds rate to zero and, with a lag, inflation to the moon. Hello, Zimbabwe (inflation: 100,500%).
Posted by bopster @ 01:58 AM (138 views) Add Comment
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