The
role of the Federal Reserve has to do with monetary policy; that of
the U.S. Treasury should be fiscal policy.
Both are supposed to be somewhat independent of each other by concept. However, they work hand-in-glove these days by political design.
Both are making basic errors to suit questionable short-term goals that have certain long-term danger.
One mostly hidden error both are guilty of, has to do with keeping reported governmental deficits artificially lower by stealth. In other words, the deficit picture is actually worse than is being shown. The Fed, by selling short-term bonds to hold longer-term bonds. The Treasury, by offering too large a percentage of short-term bonds when the longer-terms are now so artificially cheap.
Both are supposed to be somewhat independent of each other by concept. However, they work hand-in-glove these days by political design.
Both are making basic errors to suit questionable short-term goals that have certain long-term danger.
One mostly hidden error both are guilty of, has to do with keeping reported governmental deficits artificially lower by stealth. In other words, the deficit picture is actually worse than is being shown. The Fed, by selling short-term bonds to hold longer-term bonds. The Treasury, by offering too large a percentage of short-term bonds when the longer-terms are now so artificially cheap.
In
the future, the Treasury costs to manage the deficit will
therefore have to be far greater and the present deficit cost will
prove even more humongous. (See the Earl J. Weinreb NewsHole®
comments.
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