Monday, August 23, 2010

Time's A Ticking

The always colorful Ambrose Evans-Pritchard:
Fiscal and interest rate ammo has been exhausted, though not QE. I have little doubt that central banks can lift the West out of debt-deflation if needed with genuine QE – not Ben Bernanke's Black Box "creditism", or Japan's fringe dabbling. Whether they have the nerve or the ideological willingness to do so is another matter.
Also see his earlier comments on Bernanke's "creditism" here.


  1. I have a question.. it's my understanding that Bernanke cannot buy bonds or any other assets not specifically backed by the US Gov't.. is this true ? Could Ben wake up tomorrow morning and purchase $50mm in bonds from the City of Detroit ?
    Could he purchase bonds at GM's IPO ?
    In the end, this will be the difference between deflation or inflation. My personal guess.. he's not supposed to, but if forced, will absolutely do what's necessary.

  2. According to FRBNY website:
    What types of assets can I pledge to the Discount Window?

    The following types of assets are most commonly pledged to secure discount window advances:

    * Obligations of the United States Treasury
    * Obligations of U.S. government agencies and government sponsored enterprises
    * Obligations of states or political subdivisions of the U.S.
    * Collateralized mortgage obligations
    * Asset-backed securities
    * Corporate bonds
    * Money market instruments
    * Residential real estate loans
    * Commercial, industrial, or agricultural loans
    * Commercial real estate loans
    * Consumer loans
    * Check with your local Reserve Bank if you have questions about other types of collateral