The US states are massively in debt, and public-sector layoffs are causing unemployment to stay high, even while the private sector recovers. The Federal Reserve can create dollars from nothing, and at the moment inflation is apparently a minor concern compared to deflation. What would happen if the Federal Reserve assumed much or all of the debt of the states? They could pay off the debts ex nihilo at a speed of their choosing, while allowing the states to create or save jobs. They could also simply grant money to those states that have relatively little debt. Does anything like this happen, and should it? [Not an economist]
posted by East Manitoba Regional Junior Kabaddi Champion '94 on Sep 14, 2010 - 22 answers

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ForgottenEconLessonsFilter - When the US Gov't says that they are going to borrow more money to fund an initiative, what entity is doing the lending? What is there to keep them from refusing?
posted by grabbingsand on Dec 6, 2004 - 8 answers