Fed balance sheet: Private vices, public virtue

Parents are cheered when a truculent child’s screaming fits become a little shorter. Neighbours are less impressed. They hope for genuine peace and quiet. It’s much the same these days in the money markets. The parents in this case are the governments and central banks and the ill-behaved dependents are the banks, which can’t or won’t lend to each other at reasonable interest rates. The official response has been to offer banks copious candy in the form of guarantees, loans and direct investmen...