To: Kartographer
If the Treasury can no longer borrow money, the fed can't print money, which occurs when the FED buys a Treasury bill. So I think this article's concern's are unfounded.
I'm trying to think what the FED can do.
- They can make things easier on the banks by eliminating the almost non-existent reserve requirement.
- They can loan money to the banks.
- The FED could buy up Treasury bills and bonds that banks can't redeem because the treasury is defaulting providing needed liquidity. That would help banks but that wouldn't help the Treasury issue any more debt.
- Unless the Fed SOLD the bonds and bills back to the Treasury for a lot less than they were worth. But that would create a huge loss at the FED. I'm not sure but I think they would have to give that loss back to the treasury at the end of the year and the treasury would have to fund the loss which they can't do because they can't borrow money. Plus, I don't think the Board of Governors would agree to it, or that any of the Reserve Banks would implement it.
5 posted on
07/20/2011 6:07:43 PM PDT by
DannyTN
To: DannyTN
I hear the “there isn’t anything to worry about” but I don’t believe it. I firmly believe BO and company are trying to bring the economy down so they can rebuild it using a socialist model.
History is also quite clear on what happens when politicians spend with utter stupidity.
9 posted on
07/20/2011 6:42:57 PM PDT by
driftdiver
(I could eat it raw, but why do that when I have a fire.)
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