Is This the Beginning of the End of Central Bank Independence? - Kenneth Rogoff

The only difference between the two cases is bookkeeping, as in one case the Fed carries the private sector default risk, while in the other case it the central government carries the risk directly instead of indirectly. [...] Back in the early 1970s, when the relative pay in the US civil service was much higher than today and Paul Volcker was the undersecretary of the Treasury for international monetary affairs, the United States Treasury was the hotbed of ideas and scholarship in the transition to floating exchange rates, not the Federal Reserve. [...] There is a perfectly valid and legitimate way to engage in the full equivalent of helicopter money, which is for the legislature to engage in debt-financed transfers, and then have the central bank buy up the resulting debt.17 (In fact, it would be more or less equivalent to leave the central bank out of it entirely and finance the transfers with one-week debt, which would give virtually the same. [...] (In the case of the United States, a “bankruptcy” of the central bank would be entirely contrived, because the Fed’s liabilities are in dollars and it has the right to print them.18) To suggest that tearing up debt is a serious policy for dealing with the zero bound is just nonsense. [...] And in the case of the United States, the growing centrality of the dollar in the global finance system has likely reinforced America’s “exorbitant privilege” and continued to feed global demand for US dollar assets, despite the United States’ falling share of global output.