Hey kids, plug into the faithless
Maybe they're blinded
But Bennie makes them ageless
--Elton John
While speaking to the House Budget Committee today, Fed Chair Bernanke declared that, "The Federal Reserve will not monetize the debt.
In permitting such a statement to pass uncontested, perhaps the HBC does not comprehend the definition of debt monetization.
Or perhaps it's hard to recognize an activity when it's already being done on a massive scale.
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2 comments:
Let's see if I understand the definition of monetization. To monetize a 10yTN, the Fed would buy the note with funds that were not the product of any debt instrument. In other words, the money used to buy the note initially shows up on the Fed's balance sheet as an asset, with no corresponding liability, via magic.
Yep. Click of the mouse.
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