The Economic Importance of Collateralized Loans

There's nothing magical about, oh, lending it what the collateral is worth right now. It could still turn into an under collateralized loan and stamp of fingers. So there's that element, the treasury could default. If they should have only paid 620 for an asset that has a market price of 620, all the Fed needed to do is to create $620 of new reserves to go buy in the open market. But instead, what they did is they created a thousand dollars in new reserves to lend to some bank to effectively take the $620 asset onto their books. Okay. That doesn't work. And well, why? Well, because Jesus, if we all had a billion dollars