Many of the experts and proponents of expansionary policy I spoke to suggested a Fed guarantee for the municipal bond markets. This would radically reduce the borrowing cost for states and cities investing in their communities and adapting to climate change. Instead of something like the Municipal Liquidity Facility’s high-interest emergency credit, the Fed could establish a permanent program for issuing these governments municipal bonds with very friendly loans that are easy to pay back. There’s an overarching reason a pilot program pushing the boundaries of federal financing could plausibly be pulled off. The Berggruen Institute plan essentially seeks to replicate that financial dynamic for state and local government loans.

Source: International New York Times July 16, 2021 18:56 UTC