Fed Extends Lending Facilities to Boost Liquidity

The Federal Reserve announced yesterday morning that both the Primary Dealer Credit Facility [PDCF] and its Term Securities Lending Facility [TSLF] will be extended in an effort to boost liquidity for a financial system that remains stressed. They also noted the introduction of auctions of options on $50 billion of draws on the TSLF and 84-day Term Auction Facility [TAF] loans as a complement to 28-day TAF loans along with an increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.

Monetary policy used to be pretty boring with maybe one or two press releases a month showing up at the Federal Reserve's website consisting mostly of FOMC statements and meeting minutes about every six weeks or so.

That's changed quite a bit, though, the month of July (below) actually appears quite tame compared to other more "acute" periods in the credit crisis over the last year.

Thankfully, in a fiat money system, the lender of last resort doesn't have to worry about running out of money to lend. Does it?

Comments

[sbenard:]

That last question, "does it?" is an interesting one. If the Fed doesn't have to worry about running out of money, they doesn't the question then becomes this one:

Do we have to worry about the government running out of CREDIT?

That is the question that shoots dread through my heart.

2008 Jul 31 04:47 PM