Into The Breach

The most tangible sign of the credit crunch has been the complete drying out of the so-called “commercial paper” market, wherein companies pass out IOU slips (“unsecured debt”) so that their day-to-day operations aren’t shackled by the ups-and-downs of the cash flow cycle. Under the circumstances, it seems natural for the Fed to consider an unprecedented move to step into the breach and start buying commercial paper in order to get the juices flowing here.

Needless to say, this whole topic is pretty far outside my comfort zone. But I wonder — once the Fed gets into this sort of thing, how easy is it to step back out?