Interest Rate Roundup

Wednesday, December 10, 2008

Fed to issue its own debt?

Things keep getting curioser and curioser over at the Federal Reserve. According to the Wall Street Journal, the Fed is now considering issuing its OWN debt for the first time ever. As you probably know, the Treasury is the primary institution that issues U.S. government debt. More below on this very odd development ...

"The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets.

"Government debt issuance is largely the province of the Treasury Department, and the Fed already can print as much money as it wants. But as the credit crisis drags on and the economy suffers from recession, Fed officials are looking broadly for new financial tools.

"Fed officials have approached Congress about the concept, which could include issuing bills or some other form of debt, according to people familiar with the matter.

"It isn't known whether these preliminary discussions will result in a formal proposal or Fed action. One hurdle: The Federal Reserve Act doesn't explicitly permit the Fed to issue notes beyond currency."

3 Comments:

  • Huh? Who does the Fed think it is?

    End the Fed, end this debt madness.

    By Anonymous Anonymous, at December 12, 2008 at 1:00 AM  

  • Did you notice how dangerously close the WSJ writers came to giving a full description of who owns the FED?

    By Anonymous Anonymous, at December 13, 2008 at 10:16 AM  

  • Seems to me, if we want to get things started again, mortgage rates must come down. For those of us with solid credit and the ability to get a loan, it just isn't beneficial to go out and purchase a new home. My current mortgage is at 5.5%. Today's jumbo is at almost 7%. Even with devaluation, I can not replace what I have for my same monthly payment. Until there is a real benefit to generating a new mortgage, the housing market will remain stagnant. The fed can do what it wants, but it's still not addressing the issue of real front line borrowers.

    By Anonymous Anonymous, at December 18, 2008 at 11:36 AM  

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