Wednesday, December 10, 2008
WSJ: Fed Weighs Debt Sales of Its Own
Fed already does this. They're called "Federal Reserve Notes." It's the cash you carry around in your wallet.
The Fed has unlimited ability to add to bank reserves, however, it needs things to sell to manage those reserves. Historically, Treasuries have served that purpose, however, if it decides to issue its own debt it's only to lend more flexibility to this function. Even so, it is only designed for reserve maintenence. That's it. The media will misconstrue this one big time.