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Thank you for putting it so well. Keeping the corporate bond market going does not sound like a noble goal on its face but it's vital in so many respects. I ap
by talentedcoin 7y ago
Thank you for putting it so well. Keeping the corporate bond market going does not sound like a noble goal on its face but it's vital in so many respects.
I appreciate (and indeed once shared) the knee-jerk libertarianism of the people saying "let them fail", but this view does not fully appreciate the consequences of allowing a violent deleveraging such as we're experiencing now to continue indefinitely.
- OscarCunningham 7y agoI don't think its unlibertarian to support the Fed's action here. If the Fed was a private organisation, that convinced people to use dollars by promising to maintain steady 2% inflation, then it would be printing a lot of money right now. So the government not printing a lot of money right now would actually be a greater intervention away from what would naturally happen. A libertarian purist would say that money creation shouldn't be government controlled; but given that it is they should at least do a good job of it.
- Blackthorn 7y agoThere's no indication that they would actually deleverage if bailed out in this fashion. FFS, these "strong businesses" are so extremely fragile that they are liable to go bankrupt because they can't roll over some of their debt. And now the Fed just wants to let them roll it over again consequence free.
- icelancer 7y agoExactly. If your business was so dependent on rolling over bonds that you go bankrupt/de-lever massively in a 3-6 month window... how strong was the business?