[EMAIL PROTECTED] writes:
>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.
Even open market ops are a way of lending to financial
institutions, though. Allowing them to liquidate their
bonds and bills for cheap liquidity. By issuing new
money via purchase of assets that are held by financial
institutions, the Fed ensures that established FI's keep
their lockhold on money and credit.
>
>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?
Well, the fat boys can be soaked via taxes and other forms of expropriation
or the rich can be by-passed altogether, by creating alternative forms
of social wealth. These are not mutually exclusive.
Ellen
>
>Doug
>
