They’re Printing
Via the Walstreet Journal,
“As part of their contingency planning for the next recession, Federal Reserve officials are looking at a stimulus scheme the U.S. last used during and after World War II.[…]
Yield caps would be a cousin to QE. In QE, the Fed committed to purchasing fixed amounts of long-term securities. With yield caps, by contrast, the Fed would commit to purchase unlimited amounts at a particular maturity to peg rates at the target.”
QE is printing money to buy debt and this idea is printing money to buy different debt.
To translate,
Yield caps would be a cousin to QE. In QE, the Fed committed to purchasing [printing money] fixed amounts of long-term securities [to bailout lenders and lower interest rates]. With yield caps, by contrast, the Fed would commit to purchase [print money] unlimited amounts at a particular maturity to peg rates at the target [an affordable low rate for the bailed-out borrower].
$23 trillion and counting!
