Monetization has now arrived

[ScreamingEagle]

If monetization doesn't work to fix things....(and many have doubts it will)......what's gonna happen?

The Buyer Of Last Resort

What Ben Bernanke's dramatic $300 billion Treasury market move could mean for America

WASHINGTON, D.C.--3-18-09 For anyone asking how the government is going to pay for the $787 billion stimulus and the $700 billion bank rescue, ask no more. The Federal Reserve will simply print new dollars.

That was the word from the Federal Reserve today. The Fed's open market committee agreed to purchase $300 billion in longer-term Treasury securities over the next six months.

.....

Printing new money for this purpose is known as monetizing the debt--"A strategy that appears in the encyclopedia under the heading, 'how to trigger inflation,'" says a note from Guy LeBas, a fixed-income strategist at Janney Montgomery Scott, "In any other environment, this monetization would be deeply troubling."

.....

The Fed's move keeps the debt affordable and might not spark inflation. Yet it still may not be enough to revive the economy. "Purchasing long-dated Treasuries is going to put money into the system, but that money is not going to go anywhere," says Joseph Mason, a professor at Louisiana State University and senior fellow at the Wharton School, "monetary theory is in over its head." And Mason says he believes the Fed is losing hope that Congress, fatigued by bailouts and incensed by AIG (nyse: AIG - news - people ) bonuses, has the political will to accomplish much.

Thus the biggest concern is not that printing money to buy debt will start inflation, but that it will do nothing at all.

The Buyer Of Last Resort - Forbes.com