General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsIf there's no debt ceiling deal, could Obama simply order the Fed to monetize all new obligations?
Just have them poof the money into existence at Treasury.
I don't know the law about the Fed's independence; anybody have any thoughts?
unblock
(52,227 posts)this would surely be challenged and the supremos would weigh in. not clear what they would do, but of course we do know that they do not care for obama and are more than capable of making decisions purely on the basis of partisanship.
obama can't "order" the fed to do something like what you're describing, but perhaps the fed could simply decide to do it on its own. that said, what happens then? let's say the treasury owes a supplier but can't pay without borrowing. if instead, the fed pays and the treasury's debt then is to the fed instead of the supplier, well, this keeps the suppliers happy but it does nothing to reduce treasury's debt, so they still would have a debt ceiling problem. and if the fed writes off that debt, then technically the government has defaulted on its obligations, which could cause all kinds of problems.
Recursion
(56,582 posts)It's, frankly, a badly written law that gives the executive direct power over M2, which is a bad thing in the long run.
I wonder how many Fed governors would consider a "surprise QE" like this better than the alternative..
Blue Meany
(1,947 posts)passed in Congress. If they don't, then Obama should take this option for the good of the country. No sane person is going to blame him, even if he is overstepping his authority, which apparently he is not.