Dollar devaluation is a solution

Matt King: This Is The Real Reason Behind The Blow Out In Libor-OIS

Matt says the reversal of QE is causing liquidity shortage.  George Selgin warns the same. 

Interest on Excess Reserves

He says the Fed should unwind QE first, then changing interest charges second, (badly paraphrased by me).

All getting to the same issue, guv is the one being bailed.  Guv is stuffed with a back log of currency insurance payments, the currency risk that should have been shared and marked to market since 1980.  All of these insurance contracts are embedded, embedded in the post office and we are due for the tens of billions in lost pensions.  Due in the large military programs that were likely bad ideas from the start with negative payoff. We find currency insurance in he inflation adjusted payment systems.  Even food stamps  is lost of central bank market share.   And unsubsidized Obamacare insurance contract contain a long term embedded loss.

If the Fed wants to help, suggest that the Fed get legal permission to opportunistically burn each of those treasury bonds it holds. Seriously, devaluation works very nice here, and it is certainly an accepted part of central banking.

If the Fed can start an honest devaluation program, then sandbox need not force it.