If the Fed can just print money to bail out badly run companies like Ford, GM, American Airlines, etc. what’s preventing it from creating money to pay off things like student debt?

The banks ought to be at the mercy of the Fed to a certain degree. The Fed has guidance. IMHO, it is not living up to its guidance. It is instead keeping everyone maxed out on credit and doing nothing to alleviate that dangerous feature of our economy. Part of the problem is that the Fed cannot stop private banks from lending if they can. It really has no strict control on the amount of credit out there if the banks are free to do as they wish with their profits. Requirement number one is for the Fed to create a stable resilient economy. It is not doing that. It's working against its guidance to stabilize a risk filled economy. You can blame the political sphere for this. Worrying about global competitiveness is not an issue for the Fed if the government has not outsourced everything to low wage countries. In that way the Fed is not immune to politics. If we had a sound and stable economy most people would have more than $500 in reserve and non negative savings rates. So many are living right on the edge, and their lives are filled with anxiety.

/r/AskReddit Thread Parent