by Gary North, Tea Party Economist
What the Federal Reserve System can do and what it will do are two different things.
The Federal Reserve System can monetize anything. It can create digital money and buy any asset it chooses to buy. There are no legal restrictions on what it is allowed to monetize.
If it were to do this, and it continued to do this, the dollar would fall to zero value. This would produce hyperinflation. The result would be the destruction of all dollar-based creditors. Debtors could pay off their loans with the sale of an egg or a pack of cigarettes. This is what farmers did in 1923 in Germany and Austria.
The economists who advise the Federal Reserve System know this. The bankers who run the banks that own the shares of the 12 regional FED banks know this. Bernanke knows this.