Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time
Did you catch that? There's a great little language shift. The Treasury Secretary's authority is limited to $700 billion outstanding at any time. That means he could buy $700 billion -- then sell some at a loss -- and then buy more to get back to $700 billion. This is a revolving credit line, not a firm upper limit. It's conceivable the Treasury could but and sell trillions of dollars under this authority.
We had the sense to be suspicious that "$700 billion" meant "way more than $700 billion", but I hadn't appreciated how completely open-ended it really was.
3 comments:
Not sure I agree with that reading though I'm sure that blogger has had more time to analyze than I.
My reading of that is a cap at $700B--e.g., buy at $700B, sell some at a loss gaining say $100B back, then buying up to another $100B until the cap of $700B is hit yet again.
Mmm. OK, let's hope you've got it right.
On rereading, I think the blogger and I are on the same page. I think trillions could be spent but the outlay is only $700B. If assets are sold and funds recouped, then the taxpayer outlay would be capped. I'm still not convinced it won't end up an outlay of some far greater amount.
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