Fed's cash balance

Discussion in 'Economics' started by The Kin, Jul 2, 2008.

  1. What exactly is the legal process that the Fed must undertake to add another $250 billion in cash to its balance sheet?

    Is it as simple as punching the number into a computer?

    I ask because I honestly think the Fed is just about ready to use up what remaning free cash it has. I suspect the answer is the computer, but I just want to make sure.
  2. Their plan is to have the treasury borrow more from the FED than they need to finance the federal deficit. FED can then swap even more treasury bonds/bills for boats, cars, homes and anything else at the pawn shop window i.e. discount window.

    Result is that tax paper ends up holding the bad debts.