Today, on the fifth anniversary of Dodd-Frank, The Wall Street Journal published a CFS op-ed titled “Fixing the Fed’s Liquidity Mess.”
CFS special counselor Stephen Dizard and I note how:
Every Treasury Secretary since the late 1930s could proclaim with confidence that the U.S. bond market is the deepest and most liquid in the world. Today’s illiquid debt markets threaten the potency of this pledge. And it puts the global economy at risk for another financial crisis.
We offer three solutions:
– Lift the federal-funds rate to neutral levels.
– Ease restrictions on market finance.
– Arrange new private-sector liquidity facilities. Severe liquidity risks will not heal themselves—and waiting for the next crisis will be too late.