Wednesday, September 29, 2010

Minneapolis Fed: "Taxpayers Get the Risk"

I thought we weren't going to practice socialism!

"The Fed cannot literally eliminate the exposure of the economy to the risk of fluctuations in the real interest rate. It can only shift that risk among people in the economy. So, where did that risk go when the Fed bought the long-term bond? The answer is to taxpayers.
-- Minneapolis Fed President, Narayana Kocherlakota