funny money vs. soaking the fat boys

[Doug Henwood]

Ellen Frank wrote:

>Instead the Fed restricts its lending
>to financial institutions.

Yeah, but it doesn't do much of that; discount window borrowings are 
pretty rare. It's all open market operations.

I thought, though, that under the 1980 law - called something like 
the Depository Institutions and Monetary Decontrol Act - the Fed was 
authorized to buy just about any piece of paper it needed or wanted 
to. So it could buy creatively structured instruments of the sort 
you're talking about. But why? What would be accomplished by having 
the Fed buy low-cost housing or day care bonds? Isn't this just a 
funny money subsitute for real resource transfer, a way of avoiding 
the political complexities of "soaking the fat boys," to use that 
great phrase from All The King's Men?

Doug