Swamp to bail out states?

Fed Should Buy Muni Bonds to Fight the Next Recession

That means it might be up to the the Fed to get involved in the $3.8 trillion municipal-bond market to give states a much-needed boost. The central bank can only do so much during a downturn to get companies and individuals to borrow. But by directly backing states, it will immediately allow them to make payroll, start on new infrastructure projects, or both.

Let us think this through.

The gains from lending to states goes to the Federal government, after IOER is paid.  But finance industry knows how to set rates to recover the implied bond tax.   That is exactly what happened during the QEs.  Since the Fed are again taxing bonds, the lost revenue is offset by higher rates.  In other words, the finance community sees the fake and knows how to offset it.

States are screwed in the next recession, and states will figure that out.