However:

1. The effectiveness of lowering of discount rates seems doubtful to me
2. The effectiveness of accepting the highly suspect collateral in exchange for creating brand new money seems on first blush to be resting on a transfer of much risk from private hands (banks, etc.) to the Fed - a quasi-public body. Not good. In reality it is far worse though - essentially, the Fed is buying these probably fairly worthless assets at a high value in new money. The new money 1) sinks the dollar, causing accelerating inflation here at home, and 2) also increases inflationary pressures through an increased dollar supply.

So in the end, what effectiveness, if any, that the Fed’s action have depend on increasing inflation so that the US citizen (and other holders of US dollars) are in effect “buying” the worthless assets via inflation on everything else.

Although this may be the only set of solutions they can find, I don’t think we should be cheering the Fed’s inventive approaches — central banks typically try to inflate their way out of problems like this, and the Fed is simply using somewhat different ways of injecting more inflation. I guess that is innovative in a sense, but no more so than the idea of dropping dollars from that helicopter.