As long as the Fed pays its interest income received to the US Treasury, debt is free for government, and all risks of private debt are eliminated at will. What makes this work is confidence in currency, and that is dictated more by interest rates getting out of hand, which we're not anywhere near.
The perfect solution is in hand, the Fed maybe never unwinds. It becomes the abstract graveyard where debt goes to die without infecting anyone. Ben, I hate you for distorting markets, but admire you for showing us this new reality never before known.
Exactly. They will hold to maturity... no unwinding.
@@@He likened any reduction in the Fed's bond purchases to a driver letting up on a gas pedal rather than applying the brakes. He stressed that even after the Fed ends its bond purchases, it will continue to maintain its vast investment portfolio, which will help keep long-term rates down.@@@
the 'self evidentness' of your mockery is opaque to others.
for clarity, as you've earned an earnest response by insulting without a counterpoint, the past wasn't unwinding, was it. Did you miss the point ? Even stopping making new bond purchases by the Fed isn't
unwinding, is it ? You should think through the meaning of the word 'unwinding', particularly what would
force the Fed to do this. I can't find a reason they're forced. Somewhere in your mockery is the obvious
trivial answer. Why not share it ?
Because QE has created an artificial market level and there is uncertainty where the real level should be without intervention.
There is a lot of leverage in the market that has created a buy imbalance that will require many to sell as rates rise and the costs of borrowing to buy equities increases