[talentedcoin]

Just because the Fed is the originator of US Dollars (which it isn’t directly — banks do that by lending, but whatever), that doesn’t imply that fiscal and monetary policy are the same thing. They are decisions by different people for different goals. I think the Fed would be surprised to learn that they are responsible for fiscal policy as you assert.

Also, selling Treasuries isn’t “magic”. US Treasuries act as reserves in the banking system, that’s how modern banking works. You would be right to say that the Fed and the Treasury do indeed work together — after all, the US government is unlikely to default on any US-denominated obligation issued by itself — but the level of coordination you’re implying is a fiction.

[lumost]

There doesn’t need to be explicit coordination if incentives are set up as they are.

The fed has a dual mandate to provide full employment and economic stability. If the Fed’s policy caused mass bankruptcies.. then the Fed would be failing part of its mandate.

IMO the scary part of this for the fed is housing. Housing is appreciating to substantial multiples of incomes due to low interest rates and restricted supply. If the FED raised rates and crushed the housing market the majority of Americans will feel the pain.

[imtringued]

The problem with housing is that people don't want to pay land value taxes. They actually love buying a house to live in, speculate with that house and then never actually sell it because they realize they don't want to speculate on housing and just live in it. So you have this hybrid speculator/owner occupation thing going on where the speculator is draining money from everyone else but not actually benefiting from it. That person will then argue for lower property taxes because he cannot afford them which will make it easier for real speculators to make money off of real estate.