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The Government Bank

by
April 29, 2009

The Fed recently reaffirmed its determination to expand its balance sheet. The crisis has already driven it to take on risky assets such as agency bonds and commercial paper. It has also lent to weak financial institutions, and is expected to participate in the Treasury’s public-private partnership to buy toxic assets. The expansion has averted a crippling credit contraction. But the Fed could lose money by taking on risk.

FOMC Statement
Bernanke: Four Questions About the Financial Crisis
Economist: The Fed
Guha: Fed Move to Buy Treasuries Stuns Investors
FT: Bold Bernanke
Economist: Central Banks

Update (5/26/2009): Per suggestion from C.F. Reader

CommentResponse

Post a Comment 2 Comments

  • Posted by C. F. Reader

    Mr. Swartz, please revise your interesting
    graph to show the red Traditional Assets as
    a continuing bottom layer, and [R]isk Assets
    as a wedge layer above that, thus showing
    clearly the downslope in [T]raditional
    Assets, something like:

    RRRRR
    RRRRRRRR
    TTTTTTTTTTTTTTRRRRRRRRRRR
    TTTTTTTTTTTTTTTTTRRRRRRRR
    TTTTTTTTTTTTTTTTTTTTTTTTT
    TTTTTTTTTTTTTTTTTTTTTTTTT

  • Posted by C. F. Reader

    Unfortunately, leading spaces above were
    eliminated, and the code tag did not
    produce exact monospace font. The R’s
    should all line up right-justified.
    But you get the idea, hopefully ;-)

    Note to webmaster: a preview button would
    be nice. Also use of pre tag.

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