TD Special Report

Is the Credit Crunch Pushing the U.S. Federal Reserve to its Limit?

Highlights on this report are:

•   Since  the  onset  of the global credit crunch in August 2007, the U.S. Federal  Reserve has resorted to a slew of innovative (and sometimes unconventional)  approaches  to  dealing  with  the  problems  faced  by    distressed U.S. financial institutions.
•   The  effort  has  been  part  of  the  Fed’s  attempt  to  stave  off a  full-fledged  financial sector meltdown, and to blunt the adverse impact of the ongoing disruptions on U.S. economic activity.
•  Despite the massive amounts of liquidity injected into the money market, we  do  not  expect  the measures  introduced  to  pose any significant inflationary risks to the U.S. economy.
•   Moreover,  we  do not believe that the Fed’s ability to provide further liquidity  injections  into  the  financial system is compromised by its current level of commitment.
•   But  should  the  Fed’s cupboard become bare, there are several options that it can pursue to address any shortcoming it may face.
•   Ensuring  stability  in the financial markets has enormous implications for  the  economic wellbeing and prosperity for any society such that it becomes imperative for it to be pursued at reasonable costs.

To request a copy of this report, email me at sterling@xpx.ca