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Buying bonds is not spending. Those bonds will either mature and the funds paid back to the Fed or the Fed will sell the bonds on the open market. Either way,
by rmah 6y ago
Buying bonds is not spending. Those bonds will either mature and the funds paid back to the Fed or the Fed will sell the bonds on the open market. Either way, this is very different from handouts to the public or "socially productive spending" in that the money will get paid back.
Finally, it's not the Federal Reserve's role to be socially helpful except as to fulfill their dual mandates to 1) minimize inflation and 2) maximize employment.
- deleuze 6y agoThe feds balance sheet is imaginary who cares if it gets paid back.
- pbhjpbhj 6y agoSo if they call in the bonds tomorrow then Walmart will cancel dividends, etc., to pay them? Pretending there's no limit and no deleterious effect seems wrong. If that were true then the Federal Reserve could just by boobs for all debts and every citizen would be debt free and there would be nothing wrong. If every time a company struggles the gov step in, because instead of maintaining reserves the companies pay out profit, bonuses and dividends, then large companies will engineer in the need for gov assistance and their ability to self maintain will be lost.
- rmah 6y agoVery few bonds are callable. And why would the Fed need to call the bond, it's not like they are short of cash. lol. Either way, I wasn't "pretending there's no limit and no deleterious effect". As you stated, that would be wrong. There are obvious and not-so obvious problems with central banks engaging in QE (i.e. buying financial assets as a means of injecting money into the system). But this thread was about QE via corp bonds vs the Fed handing out gifts to the public so I didn't go into that.
- jaekash 6y ago> So if they call in the bonds tomorrow then Walmart will cancel dividends, etc., to pay them? They can't, not how bonds work. > Pretending there's no limit and no deleterious effect seems wrong. Nobody is pretending. There are many potentially deleterious effects, but amazingly the set of problems people have with this have almost no intersection with the potentially deleterious effects. > If every time a company struggles the gov step in This is a pandemic. The government engineered a scenario which destroyed the economy to save lives. Walmart engineered nothing here.