{"id":107,"date":"2008-03-11T15:14:03","date_gmt":"2008-03-11T20:14:03","guid":{"rendered":"http:\/\/scripts.mit.edu\/~zong\/wpress\/?p=107"},"modified":"2008-03-11T17:13:05","modified_gmt":"2008-03-11T22:13:05","slug":"credit-creation","status":"publish","type":"post","link":"https:\/\/blog.yhuang.org\/?p=107","title":{"rendered":"credit creation"},"content":{"rendered":"

So finally, the Fed is taking home loans onto its balance sheet, a tool Bernanke proposed years ago<\/a> to combat deflation. (Interesting, the list of reflationary tools proposed were: drop short-term interest rate, cap long-term rate, buy private debt, buy foreign debt, tax cut, and government purchases; so there are just a few more options left.)<\/p>\n

Fed Easing Liquidity in Funding Markets<\/strong><\/p>\n

By Jeannine Aversa, AP Economics Writer <\/p>\n

The Fed announced the creation of a new tool, called the Term Securities Lending Facility (TSLF), geared to provide primary dealers — big Wall Street investment firms and banks that trade directly with the Fed — with 28-day loans of Treasury securities, rather than overnight loans. They would pledge other securities — including federal agency residential-mortgage-backed securities, such as those of mortgage giants Fannie Mae and Freddie Mac — as collateral for the loans of Treasury securities. Fed officials said that’s the first time they’ll be accepting mortgage-backed securities through this type of lending program.<\/p><\/blockquote>\n

Unfortunately, that does tend to make the Fed less credit-worthy, say if the banks were unable to repay their 28-day debts. And since the Fed is where the government keeps its money:<\/p>\n

U.S. Treasuries Riskier Than German Debt, Default Swaps Show<\/strong><\/p>\n

By Abigail Moses<\/p>\n

March 11 (Bloomberg) — The risk of losses on U.S. Treasury notes exceeded German bunds for the first time ever amid investor concern the subprime mortgage crisis is sapping government reserves, credit-default swaps prices show. <\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

So finally, the Fed is taking home loans onto its balance sheet, a tool Bernanke proposed years ago to combat deflation. (Interesting, the list of reflationary tools proposed were: drop short-term interest rate, cap long-term rate, buy private debt, buy foreign debt, tax cut, and government purchases; so there are just a few more options […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1297,921,1294,1299,1295,923,1048,1296,1298,531],"class_list":["post-107","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-ap-economics-writer","tag-creation","tag-credit-default-swaps","tag-debt","tag-fannie-mae-and-freddie-mac","tag-fed","tag-home","tag-interest-rate-cap","tag-jeannine-aversa","tag-treasury"],"_links":{"self":[{"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=\/wp\/v2\/posts\/107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=107"}],"version-history":[{"count":0,"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=\/wp\/v2\/posts\/107\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.yhuang.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}