Does it say that the Fed can purchase equity stakes in private companies? So not only is the Fed doing things outside of its legal authority, it is playing games, that if played, are only to be done by the Treasury.
Why don’t we do it that way? Perhaps adding another $30 billion to the Obloated budget deficit will finally make people think it is not fiscally responsible? Seriously, if you capitalized the value of implicit taxpayer obligations that are sitting on the Fed’s balance sheet, we are talking trillions more that the Treasury is on the hook for.
There are still 5 states with pending honest money legislation. We have devoted an entire issue to it this month on DGC Magazine
My favorite sedative has always been The Federal Reserve System (sorry, I don’t know how to italicize that), a book I inherited along with three of Bastiat (no kidding) and Warren’s Prices. The latter four were not sedative.
The book I had on the Federal Reserve was printed after Bastiat, before Warren, and before Hayek, not to mention Robert Bartley.
I can’t recall anything in it that justifies what is going on now, but who the hell cares about what’s legal? Last summer I used to chuckle over Gordon Liddy’s throwing the paper dollar into the coal bucket with the grumpy “The euro, the yen, the dollar — Unreliable!” Now, the same commercial gives me goose bumps.
Today someone told me that a talking head said municipal bonds were a safe investment, which is true if they are water and sewer bonds, since they are not likely to default, and if you by short-term ones toy might be able to repalce them with dollars that might fetch a return that may compensate you for something less than Weimar-style inflation. Notice there are a lot of qualifiers in that statement.
I hope this commentary does not unnecessarily divert Winter Cow, and I do not expect a response, from him.
FYI, I tried Cafe Hayek and the link did not work.
One quick comment — you are right. If you capitalize, say, $1000 per month for social security, plus $500 a month for cheap health care for everybody, plus the energy assistance some people will get after Cap-and-Trade, plus existing assorted entitlements, the number gets close to a hundred trillion, even if you discount it using 5%, and 5% is rosy-colored. I hope your students know scientific notation. Give them a problem: what’s $4000 a month capitalized at a constant rate (i.e. the yield curve is flat) of 10%? Extra credit for 20%. All times 300 million people.
Word problem: How many people will it take to move the wheelbarrows of credit cards to pay for it, at 50,000 credit cards per wheelbarrow, each having a $5000 credit limit?