Nowell: buying commercial paper is not a big CB innovation. The Bank of England has been a commercial discounter for centuries. Buying other kinds of loans--well, maybe. Almost any asset can be monetized. Gold in addition to govt bonds is one, as are foreign bonds (unsterilized transactions, etc.). The Fed's network of offices and real estate are monetized.
Monetizing stocks follows naturally from banking systems where equities as well as bonds are used to balance deposit liabilities. Note that the press mentions stock monetization as driving down the Hong Kong interest rate. That's because as assets depreciate banks have to cut back new lending (raise price; also quality controls) to bring deposit liabilities and assets into balance. It is likely that if Glass-Steagall is overthrown we will see the day when our Fed buys stocks. Remember you read it here first.
-- Gregory P. Nowell Associate Professor Department of Political Science, Milne 100 State University of New York 135 Western Ave. Albany, New York 12222
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