Like @MoneyIllusion, I believe the Fed's calls for a larger fiscal response are calls for relief rather than stimulus. Generally Fed officials are reluctant to chime in on fiscal policy. themoneyillusion.com/does-the-fed-f… 1/n
But complaints about limited uptake some of the Fed's 13(3) facilities, and of its MSLF and MLF especially, have egged them on this time. Those complaining have often suggested that the Fed's lending terms have been too strict.
Some wonder why the Fed can't take bigger risks, or make its loans forgivable, like the SBA. But the Fed's 13(3) lending rules aren't so flexible, even with Treasury backstops. So Fed officials have called for more fiscal action to relieve the Fed of such pressure.
It's a perfectly understandable posture for Fed officials to take under the circumstances. They are not implying that the Fed lacks adequate stimulus ability. They are saying it is not able to function as a source of relief funds, which is both true and (I think) proper.
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