The Fed Intervention · UE University

The Fed Intervention

There is a lot of chatter on the news about the fed intervention in the Japanese Yen. I wanted to share a portion of the credible threat theory and look at the Brenanke speech and this particular statement.

“The Fed can inject money into the economy in still other ways. For example, the

Fed has the authority to buy foreign government debt, as well as domestic government

debt. Potentially, this class of assets offers huge scope for Fed operations, as the quantity

of foreign assets eligible for purchase by the Fed is several times the stock of U.S.

government debt.”

It would only seem to be the expected path of the fed considering this quote. I myself have thought about this many times and wondered what would trigger such an event.

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