The Fed leaving mortgage-backed securities on its books risks permanently intertwining monetary and fiscal policy, because if the mortgage market weakens the Fed may resume large purchases, and because waiting too long to exit may cost credibility and make exit impossible; the Fed's loans to the ECB during the Greek rescue showed it moving deeper into unorthodox policy rather than exiting.

forecastpending

Speaker

John Taylor

Evidence Quote

our Fed participated in that yeah they made loans to the ECB ... in the direct opposite direction ... it wasn't it was was not an exit strategy it was staying into this unorthodox policy

Source

John Taylor on the State of the Economy 07/19/2010EconTalk
Created: 6/15/2026, 9:17:28 AM

My Notes

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