“For the Fed to lend directly to the Treasury, to government agencies, or even to private entities that the Treasury otherwise would have to fund through the‧‧‧
“For the Fed to lend directly to the Treasury, to government agencies, or even to private entities that the Treasury otherwise would have to fund through the regular congressional appropriations process, is a slippery slope. The costs of doing so are politicization of the money supply process. As a general principle, the Fed’s charter wisely prohibits such lending. Discount window accommodations to insolvent institutions, whether banks or non-banks, misallocate resources. Political decisions in those cases are substituted for market decisions. Institutions that have failed the market test of viability should not be supported by the Fed’s monetary issues, and the Fed’s discount window lending expands banking reserves just as much as open-market operations do.” Anna J. Schwartz – Walker F. Todd, 18 Nov 2008.
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As an Investment Consultant and Specialist, Pompeo Pontone is a Professional Investor with 25 years’ experience in the fields of Investment Management, Quantitative Finance & Derivatives Trading and Data Science.