why the fed will save bnb, page-2

You will note that the US Fed and Treasury have found some very clever means of increasing the reserves carried in banking system without resorting to "debt monetisation" (polite talk for "turning on the printing presses").

However, Bernanke has threatened to do the nasty - print the money - monetise the debt - BUY LONG TERM TREASURY BONDS!!

He is using every lever at his command to halt the deflation.

As he points out ... it will be an interesting call to see how he turns off the massive liquidity supply. We have very little experience with this. In fact the "cure" could, if inappropriately handled, cause another version of the disease we are currently suffering.

For BNB - the problem of trying to find increasingly more valuable dollars to pay back fixed loans on infrastructure assets will be replaced with "the good old days" - asset inflation justifies the large debt burden, general inflation means that increasingly valueless dollars pay back the debts leaving high intrinsic value in the assets owned.

BNB assets are valued in a sharp deflationary regime - hopefully we get to unwind the value in a future mild inflationary environment.