Because I think our unelected politicians would do a better job than our elected ones. For one thing, it avoids partisan gridlock. Need I mention how many times Republicans threatened to not raise the debt ceiling and cause default?
And there's a technical reason as well: if the Fed credibly commits to using fiscal policy in a predictable, countercyclical way, then the mere presence of this policy ought to dampen recessions. On the other hand, whether Congress actually passes stimulus spending or not is highly unpredictable and so the markets cannot rely on it.
You have a lot of trust in those unelected politicians.
I imagine their first fiscal decision would be granting themselves the authority to buy corporate debt. Nothing beats acquiring productive, physical assets with infinite fiat currency! What's the term for an economy where the state owns the means of production again?
Buying corporate debt is not a fiscal decision. If the Fed wanted to do that today, there is no law on the books stopping them.
Fiscal policy concerns how much the government spends, and on what.
Furthermore, you only own a company when you own its equity, not its debt.
No offense, but for someone who seems so worked up about what the Fed might do to us, you seem rather uninformed on the basic facts of what it actually does and how.
We've reached the comment limit here, but it is absolutely not agreed that the Fed has legal authority to buy equities.
"Former Fed official Joseph Gagnon has lamented that the Fed’s asset purchase authority “is limited by law to the Treasury, agency, and agency MBS markets plus foreign exchange” (emphasis added), and others agree."
They could attempt to do so with some really creative legal interpretations, but it would probably take an act of Congress to resolve all of the resultant lawsuits.
Yes, but the post generally agrees with my assessment, which is the Fed could go and buy equities or corporate debt if it really wanted to (and other central banks, just as the ECB or JCB, have already done just that, without nationalizing their economies in the process):
"Substantively, the Fed probably enjoys greater discretion in unconventional monetary policy—possibly extending to the purchase of equities—than is commonly assumed."
FYI, you were probably restricted from replying immediately to my post, not because of the comment depth.
And there's a technical reason as well: if the Fed credibly commits to using fiscal policy in a predictable, countercyclical way, then the mere presence of this policy ought to dampen recessions. On the other hand, whether Congress actually passes stimulus spending or not is highly unpredictable and so the markets cannot rely on it.