A rundown of why the Federal Reserve is hesitant to do more to backstop state/local debt. It& #39;s both helpful as an explainer, and infuriating because so many of the quoted reasons for restraint are bullshit. 1/ https://www.nytimes.com/2020/04/01/business/economy/fed-coronavirus-municipal-debt.html">https://www.nytimes.com/2020/04/0...

The concern about the Fed "picking winners and losers": Yes, you will be picking them. But this is equally a problem for the liquidity aid the the Fed is giving everyone from big private companies to foreign central banks. Hasn& #39;t stopped them in those cases. 2/

The concern about buying too much bad debt: This is literally meaningless! The Fed is not like a normal bank. It cannot go bankrupt. If its balance sheet is negative because assets go bad, that has zero consequences beyond the aesthetic. https://nathantankus.substack.com/p/a-quarter-of-the-2-trillion-dollar">https://nathantankus.substack.com/p/a-quart... 3/

The concern about how municipal debt finances different things, "from city parks to airports to state operations": Who cares? Money is fungible. Free up more money in one part of a state/local budget, the other parts will have more money too. 4/

Finally, the concern about the underdeveloped market for state/local bonds: This is... actually true. It& #39;s not a well-run market, there aren& #39;t many dealers, communication is hard. It will take a lot of outreach by the Fed, and some market-creation. But it& #39;s gotta be done. 5/5