VitalAccurateThinking

How the Fed became a pawnbroker

I am not sure I like the Fed becoming a pawnbroker:

"With its new tools, the Fed has provided liquidity without printing much money. It has temporarily absorbed risky and illiquid securities, and supplied government securities, which are risk-free. So instead of monetary policy, in the sense we traditionally have thought about it, the Fed has become a risk-absorber (temporarily, we hope). Or, to put it less kindly, a pawnbroker."

posted by Jim VAT @ 8:59 PM