Is Bernanke Going To Start Printing Money To Buy California State Debt?

Friday, October 22, 2010
By Paul Martin

Joe Weisenthal
BusinessInsider.com
Oct. 22, 2010

There’s growing chatter about the Fed engaging in truly abnormal asset purchases: rather than just buy Treasuries or more mortgage debt, it could buy muni debt, pumping money directly towards states and cities.

Arguably this would be way more affective than traditional QE, as traditional QE will just see more excess cash pile up on bank balance sheets, with little to show for it in the real economy. Making cities and states more flush wouldn’t have this problem.

But! The Fed can’t get away with this.

The moment Bernanke starts buying California debt, he’ll be setting the clock on the death of Fed independence.

The Rest…HERE

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