At the Fed, Debt Magically Becomes Equity
May 2, 2008
Fed Takes Steps to Add Liquidity
WASHINGTON — The Federal Reserve announced new steps on Friday to help ease tight global credit markets by increasing the size of its cash auctions to banks and allowing financial institutions to put up credit card debt, student loans and car loans as collateral for Fed loans.
The Fed also acted in coordination with central banks in Europe to make it easier for European banks to obtain dollars in currency swaps.
In a terse statement Friday morning, announced just before the government reported that 20,000 jobs were lost in April, the Fed said that it was acting to counter “persistent liquidity pressures” in credit markets in Europe and the United States.
The analogy is as follows: You have been denied credit at your bank (in this case the Federal Reserve) because you
lied about how much equity you had in your house,
lied about the value of …