144 – Peter Stella on Debt, Safe Assets, and Central Bank Operations
Macro Musings with David Beckworth
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How to Lower the 10-Year Treasury Rate
When a central bank buys Treasury securities, it's paying with a different kind of Treasury security. I think it's fair to say that even implicitly, we, I think market expects the Treasury to bail out the Fed should something go wrong. So these are liabilities of a consolidated kind of government balance. Right? And what are the bad things about bank reserves? Oh, by the way, the only people who can hold them are banks. Okay. Great.
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