Sigh

Courtesy of Jesse:

"The main thing is that the debt is in dollars. So we can't run out of cash--we print the stuff. Suppose that foreigners decide we're not reliable.   How does that drive up interest rates?   The Fed controls short-term interest rates, and long-term interest rates reflect expected short rates. How's that supposed to happen?"

-Paul Krugman

I take exception to the notion that the Fed, or any other central bank, is bigger than the market.  If that were really true, then why do we see so many results/recessions/busts that run counter to their agendas and policy plans?

But, more than that, if we look at the broader implications of his comment, do the problems end simply with where rates are?  In fact, if the Fed has to print endless amounts of money to battle bond sellers, foreign and domestic, what happens to the dollar?  There are so many possible knock-on effects that are troubling, that the sheer academic arrogance in his comment is astounding.