# Fed to buy corporate debt?



## LastOutlaw (Jun 1, 2013)

*As Fed nears rate hikes, policymakers plan for 'brave new world'*

https://ca.news.yahoo.com/fed-nears...ers-plan-brave-world-005117150--business.html

JACKSON HOLE, Wyo. (Reuters) - Federal Reserve policymakers are signaling they could raise U.S. interest rates soon but they are already weighing new tools they may need to fight the next recession.

A solid U.S. labor market "has strengthened" the case for the first rate increase since last December, Fed Chair Janet Yellen told a central banking conference in Jackson Hole, Wyoming. Several of her colleagues said the increase could come as soon as next month if the economy does well.

Further rate hikes are expected to be few and far between as the U.S. central bank tries to balance a desire to fuel growth against worries it could overheat the economy.

But Fed officials at three-day conference that ended Saturday also said they need to consider new policy tools for use down the road, such as raising the inflation target or even Fed purchases of non-government-backed assets like corporate debt.

Such ideas would test the limits of political feasibility and some would need congressional approval. The view within the Fed is that it could take effort to win over a public already skeptical of the unconventional policies the Fed undertook during the last crisis.

Policymakers think new tools might be needed in an era of slower economic growth and a potentially giant and long-lasting trove of assets held by the Fed. And they are convinced the time to vet them is now, while rates look to be heading up.

"Central banking is in a brave new world," Atlanta Fed President Dennis Lockhart said in an interview on the sidelines of the conference.

At the center of the Fed's discussions is its $4.5 trillion balance sheet, built up by bond-buying sprees to combat the 2007-09 recession but which has been criticized by many lawmakers.

While policymakers have maintained the Fed should eventually reduce its bond holdings, Lockhart said some officials were closer to accepting that they needed to learn to live with them.

"I suspect there are colleagues who are contemplating at least maybe a statically large balance sheet is just going to be a fact of life and be central to the toolkit," he said.

Officials have said they will slowly let the balance sheet shrink, a process that would take years and would not begin until interest rate increases are well underway. Substantial progress could be made only in a very long-lived economic expansion.

"I am sure everyone in the audience would be happy if this were the reality. I certainly would be," Simon Potter, the New York Fed's markets chief, said during the conference.

Yellen, in her speech on Friday, said balance sheets would likely swell again in future recessions as the Fed snaps up assets to stimulate the economy.

The conference, attended by all but two of the Fed's 17 policymakers as well as central bankers from around the world, also presented a menu of more exotic proposals. This included a Fed takeover of short-term debt markets and abolishing cash in order to charge negative interest rates.

Many of the more radical proposals, including one to abandon monetary policy altogether and focus on urging runaway deficit-spending, were seen as ivory tower musings.

Most policymakers, including Yellen, said it was likely the tools the Fed used to fight the last crisis, including rate cuts, bond purchases and jawboning on rate expectations, will be adequate.

Still, she said, "future policymakers might choose to consider some additional tools that have been employed by other central banks," including buying a wider range of assets or raising the inflation target. She also cited the possibility of targeting the average level of prices in the economy rather than their rate of change.

Notably, her laundry list of possible tools did not include negative rates, an idea that has been nearly universally panned by Fed officials. She said the Fed is not actively considering additional policy tools but participants at the conference suggested the process is already well underway.

"You are seeing an exploration of how are we going to operate in a quite different world than before the crisis," Lockhart said.

(With reporting by Howard Schneider; Editing by Chizu Nomiyama)


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## bigg777 (Mar 18, 2013)

LastOutlaw said:


> *As Fed nears rate hikes, policymakers plan for 'brave new world'*
> . . . presented a menu of more exotic proposals. This included a Fed takeover of short-term debt markets and abolishing cash in order to charge negative interest rates. . .


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## LastOutlaw (Jun 1, 2013)

Once the fed buys corporate debt is it any different than Venezuela taking over factories and businesses?


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## bkt (Oct 10, 2008)

Bear in mind the Federal Reserve is not really part of the government. But at the end of the day, the result will be similar.


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## bigg777 (Mar 18, 2013)

I am not the shiniest penny in anyone's pocket but even I can deduce that once we are forced into a cashless society and the central banks move to a negative interest rate policy (NIRP), the government and their big banker buddies can tax us behind our backs at any rate they choose.

Think about this come November when the candidate that is backed by hundreds of millions of wall street banker dollars, smiles at you and lies about the real motivation for her candidacy.


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## hiwall (Jun 15, 2012)

> Fed to buy corporate debt?


This is already being done in Japan and in the EU (and maybe China). Plus look at all the US federal government grants and loans that are now given to corporate entities. And how would this be any different than the fed already buying the "bad" debt from the large corporate banks that they have already done?


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## AmishHeart (Jun 10, 2016)

Because wouldn't they then be federalizing the corporations? They are already picking winners and losers with our tax money (think solindra and ge), but federalizing corporations is socialism. Look at Venezuela...didn't they arrest a private business owner in the last few weeks who was just trying to leave the country? They want to force companies to run their company to the ground financially, have a scapegoat to blame it on (bad, company, bad) and then the government can take it over. Atlas is shrugging.


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## bkt (Oct 10, 2008)

Exactly, AmishHeart. And that was the plan all along.

Prediction: Obamacare is a ruse to nationalize our health care industry. We knew it would fail from the start. You cannot add government to an expensive process and expect it to be less expensive. Government officials will blame it on greedy pharmaceuticals/hospitals/doctors/insurance companies and take the whole thing over. This will result in higher taxes (for those who pay them) and much worse service.

Remember George W. Bush? "I've abandoned free market principles to save the free market system." He said that after the government bail-out of General Motors. Obviously, he didn't save the free market system but he certainly did set one heck of a precedent for future politicians taking over private enterprise.


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## phideaux (Nov 7, 2015)

I guess I'm a weirdo, :dunno:

But for some reason...my mind has a tendency to think about the movie..

*"Hunger Games"*

Crazy , I know.vract:

Jim


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## LastOutlaw (Jun 1, 2013)

bkt said:


> Bear in mind the Federal Reserve is not really part of the government. But at the end of the day, the result will be similar.


No, the Fed is not the Gov, The Bankers own the Fed and the Fed owns the Gov.
It is exactly the same thing as Venezuela and Gov takeover of business.


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