Uh Oh

"The result has been an explosion of the Fed’s balance sheet and of the monetary base. With assets approaching $2,263bn and capital of less than $40bn, the Fed increasingly resembles a public hedge fund, leveraged at more than 50:1."

That’s Niall Ferguson, writing in last Friday’s FT. He ends by suggesting that the easiest solution to the crisis might be some sort of debt holiday, but the piece is interesting throughout. I also liked this line:

"Is it really plausible that the cure for excessive leverage in the private sector is excessive leverage in the public sector?"

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