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But that would not resolve the safe asset shortage.
You don't need the safe asset shortage story.
America produces the world's primary reserve currency and the world's primary safe asset.
Just to be clear, I'm not ideologically opposed to the safe asset thing.
This is the idea that bank debt is a public good because it is a "safe" asset.
High reserve requirements forced banks to lock up much of the economy's savings in safe asset classes like government debt.
Moreover, if these were financed through federal taxes Eurobonds would be even more of a safe asset.
THE "safe asset shortage" has consumed a great deal of oxygen within the econoblogosphere over the past few years.
Mistaking a "mostly" safe asset for a genuinely safe one is worse than simply using a risky asset.
I doubted whether that is possible.To see why, it helps to understand what makes for a genuinely safe asset.
"Munis stand out as a relatively attractive area, offering relatively high yields in a relatively safe asset class," said John Derrick, portfolio manager at U.S. Global Investors.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com