Earlier:
Speaking via video conference with bankers in Kansas City, Yellen said the issue was not a pressing one right now and pointed out the U.S. central bank is currently barred by law from buying corporate assets.But the Fed’s current toolkit might be insufficient in a downturn if it were to “reach the limits in terms of purchasing safe assets like longer-term government bonds.”“It could be useful to be able to intervene directly in assets where the prices have a more direct link to spending decisions,” she said, adding that buying equities and corporate bonds could have costs and benefits.
She repeated last week:
In a speech in Hong Kong this week, former Fed chair Janet Yellen stated that “global central banks don’t have adequate crisis tools.”According to that logic, she believes that launching additional multi-trillion dollar rounds of quantitative easing and cutting interest rates into negative territory – two aggressive and controversial monetary tools that are currently available – are simply not enough.
In bold parts above. That is enough, the Fed is contractually bound to Congress. Hence it will never have the ability to estimate and expense currency risk, it will never be a true currency banker.
I looked at federal contract law to know we have a problem. Congress can cancel cancel contracts, it is understood. Given that 'To coin money...' is enshrined, we and the globe will have central banking infected by a large dose of MMT. MMT means midnight, sudden meetings to reconcile a generational mismatch.
I have no resolution, yet, of this issue, I have no theory that applies, we are in a disorder, rearrangement is certainly possible. To me it boils down to tax dollar share of the currency market; 40% at a minimum, 75% at a maximum. It is a finite channel, the currency markets, and subject to extreme productivity shifts with technology. I cannot boil it down to a path.
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