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What happens if there is too much debt (as assets) on the Fed's balance sheet? Can they just write them off?
by NTDF9 8y ago
What happens if there is too much debt (as assets) on the Fed's balance sheet? Can they just write them off?
- mpax 8y agoThey can just sit there in perpetuality, there’s no swat team going to bust in the door because one leg of government lent to the other.
- NTDF9 8y agoDoes that erode trust in currency and cause hyper inflation? I suspect no.
- tabtab 8y agoThe biggest downside is that if there is a big slump, the gov't doesn't have spending money for a stimulus. We could then get stuck in a protracted rut or deflationary spiral. In the longer term, GDP growth can make the debt moot (if more is not added), but if we have a big slump sooner, we are screwed.
- acct1771 8y agoCalling the Federal Reserve an arm of the government is misleading at best.