That is the worst thing the government can do. By just increasing the amount of money by printing more means that you just devalue the currency. This is what killed the economy in Germany after World War I and ushered Hitler into power, when the deutschemark was so devalued it took a wheelbarrow full of money to buy a loaf of bread.
Why not? The FED can keep buying it's treasuries until you have a negative amortized yield on the security. I believe we had that happen once in the past six months. So it might be possible. Don't know why anyone would buy, though, is the real catch. These are on real short maturities, too.
You both seem to believe that this would not set a precedence that nobody can afford. Why would banks lend to other countries because of that tax on their reserves?
Why ''why not?'' ? You just wrote that you don't know why anyone would buy and it still something relevant? that just puzzled me.
Whatever it takes to pretend to avoid deflation and-or depression is what IS happening. Here's from Swiss National Bank earlier this week: Where necessary, the SNB may also, for example, sell an unlimited amount of Swiss francs against foreign currency in order to prevent an appreciation of the Swiss franc or even to bring about a depreciation of the national currency. http://www.snb.ch/en/mmr/speeches/id/ref_20090121_pmh Devaluation is coming to the Dollar Store near you. It is the solution to re-inflate. Your home will be worth 800K easy. And you better be prepared to die in it. The Donald doesn't want your middle-class house, boomers in their twilight don't want your house, they're downsizing. It will take years perhaps a decade, if at all, for the feckless of today to regain honorable status. And for those precious first-time home buyers with excellent credit and significant savings for significant down payments, they just might be intelligent and have need to be stingy. The only question is will devaluation be initiated by the US government intervention in the currency markets, by foreigners holding US debt demanding higher interest, or the up and coming societies dropping the US dollar as THE reserve currency. Reverse splits and forward splits both suck when price inflates and base currency deflates.