Cranking up the printing presses to fund a bailout requires no immediate tax hikes, minimal official federal spending increases, and little legislative involvement.
Congress facilitated the municipal bailout now underway by simply allocating $35 billion to a Special Purpose Vehicle to backstop the $500 billion in new fiat currency lent by the Federal Reserve.
Perhaps most importantly, this program implements the infrastructure for a future massive bailout of poorly managed governments.
Others desire a bailout by the central bank of woefully underfunded public pension plans through the purchase of pension obligation bonds.
Importantly, although existing law limits emergency Federal Reserve lending to only "Solvent" institutions, the central bank appears ready to flout this rule.
Congress should proactively roll back the authority of the Federal Reserve to directly or indirectly provide credit to state and local governments.
If Congress chooses to bailout municipal governments-as ill-advisable as that would be-it should utilize its constitutional spending authority rather than abdicate responsibility to an opaque, economically dangerous fiat money creation process at the Federal Reserve.
https://www.realclearmarkets.com/articles/2020/05/02/a_backdoor_central_bank_bailout_of_state_governments_490609.html
Congress facilitated the municipal bailout now underway by simply allocating $35 billion to a Special Purpose Vehicle to backstop the $500 billion in new fiat currency lent by the Federal Reserve.
Perhaps most importantly, this program implements the infrastructure for a future massive bailout of poorly managed governments.
Others desire a bailout by the central bank of woefully underfunded public pension plans through the purchase of pension obligation bonds.
Importantly, although existing law limits emergency Federal Reserve lending to only "Solvent" institutions, the central bank appears ready to flout this rule.
Congress should proactively roll back the authority of the Federal Reserve to directly or indirectly provide credit to state and local governments.
If Congress chooses to bailout municipal governments-as ill-advisable as that would be-it should utilize its constitutional spending authority rather than abdicate responsibility to an opaque, economically dangerous fiat money creation process at the Federal Reserve.
https://www.realclearmarkets.com/articles/2020/05/02/a_backdoor_central_bank_bailout_of_state_governments_490609.html
No comments:
Post a Comment