Sublime

In various other ways, Warburg judged that the American system, adequate perhaps for an agrarian society, was unsuited to the fast-growing industrial and commercial economy of the early 1900s.

Do we think the Fed will abandon its responsibility to control inflation and resort to total monetization of U.S. debt? No. But in the attempt to get mild inflation, it is possible the controlled fire they hope to kindle could get out of control, forcing them to act to take back the excess reserves and bring about a recession, as did Volcker. Let’s

Evidently, he surmised, banks felt less need to keep their own reserve knowing that the Treasury was ready and eager to assist. This anticipated the “moral hazard” arguments against bailouts in the 2000s.