Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in

Fed Considers Unconventional Measures

IMG Auteur
24hgold
Published : April 13th, 2008
464 words - Reading time : 1 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

 

 

 

 

During the Great Deflation Scare of 2002 -- you remember, the brief interlude between the collapse of the stock market bubble and the rise of the housing bubble -- researchers at the Fed authored a series of papers exploring "unconventional measures". These studies and other musings were reported in speeches by Bernanke and papers published on various regional Fed web sites (in an earlier piece,, I identified 14 such papers and speeches). These so-called "unconventional" measures consisted of the outright monetization of assets and, failing that, various bizarre money-crankish schemes for debasing the dollar.

 

It looks as if these plans, and other similar ones developed since then, are now being put into effect. Last week, the Wall Street Journal reported (on their paid site) Fed Weighs Its Options in Easing Crunch.

 

WASHINGTON -- The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

 

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed's name rather than the Treasury's; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

 

So far, the Fed has not been monetizing assets as such. They have been taking distressed debt off the balance sheet of banks and then selling an equal amount of US Treasury securities from it's own balance sheet. (However, Steve Waldman on his blog has called this covert nationalization; and the (UK) Telegraph has reported that the Fed may consider outright nationalization of insolvent banks.)

 

But if you accept the mainstream analysis, the Fed is not increasing the monetary base because, on net, they are purchasing and selling the same quantity of securities. The article devotes considerable space to the possibility that the Fed might run out of assets on its own balance sheet, and what steps can be taken to prevent this.

 

But why? The Fed does not want the Fed Funds rate to drop, as would happen if it made net purchases of securities from the banking system. But, in the end, the Fed does not need to swap assets for assets. In can simply purchase distressed or worthless assets and write a check on itself to pay for it. And so, further down:

 

Fed officials also are investigating the feasibility of the Fed issuing its own debt and using the proceeds to purchase other assets or make loans. It has never done so; the legality is unclear. Some foreign central banks, such as the Bank of Japan, do so.

 

 

 

Robert Blumen

 

 

Robert Blumen is an independent software developer based in San Francisco, California

 

 

 

 

 

Data and Statistics for these countries : Japan | All
Gold and Silver Prices for these countries : Japan | All
<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
Robert Blumen is an independent software developer based in San Francisco, California
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
The Rediscovery of Men
07 Decaccording-1
and now bernie has a brand new house. i smelled that the fix was in when he said he was running against filthy hillery. then at the perfect moment...
The Rediscovery of Men
07 Decaccording
i suspect that georgie S and his goons will crash the coin and try to starve our guts and spirits with fears we havnt felt perhaps ever. it will be...
The Deepening Deep State
07 Decaccording
james this is a nice piece of writing. good to see you moving to the Right. its probably safer there for awhile at least.
Jack Kemp's Gold Standard Act Of...
05 Decsam_site
We were on a disastrous 40% Gold Standard from 1914 thru 1944 and this half-assed 40% standard enabled the globalists to create two world wars...
Dollar Reappraisal : Gold Vanish...
04 Decsam_site
Enjoyed the gold history lesson of 1965. Palyi's quote "where the Welfare State is on the march, the Police State is not far behind" is prophetic....
Indian ‘Gold Ban’ a Portent of M...
03 Decsam_site-1
You believe like Brandon Smith, that Trump was allowed to win or is a secret globalist puppet that will be "fingered as the scapegoat for this...
Lawrie Williams: Major gold pric...
02 Decian15171
Hmm. the first signs of the long talked about disconnect between paper and physical?
Trump Makes The US Stock Market ...
02 DecThe Recusant
I'm forever blowing bubbles, Pretty bubbles in the air, They fly so high, Nearly reach the sky, Then like my dreams They fade a...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS