The EU's Systemic Risk: Why This Time Is Different [View article]
Excellent, balanced article. Regarding Fed policy, it's only necessary to understand the Fed's #1 Drop Dead Policy Objective: Prevent Liquidity Crisis in the US (and, of late, the global) Banking System. Why is this the prime objective? Because liquidity crises are *always* the cause of bank and banking system failures.
So ... Q1: Can the Fed achieve this policy objective? A1: Yes, absolutely: It can inflate its balance sheet at will, lending against anything it wants to, and pumping money/liquidity into the system. Q2: Will there be a major liquidity crisis that will require the Fed to do this? A2: Yes: Graham Summers answered this above.
The EU's Systemic Risk: Why This Time Is Different [View article]
So ... Q1: Can the Fed achieve this policy objective? A1: Yes, absolutely: It can inflate its balance sheet at will, lending against anything it wants to, and pumping money/liquidity into the system. Q2: Will there be a major liquidity crisis that will require the Fed to do this? A2: Yes: Graham Summers answered this above.
The EU's Systemic Risk: Why This Time Is Different [View article]