Alan Grayson and Ron Paul both deserve a lot of respect for this piece of legislation. It attempts to make it slightly more difficult and much more transparent for the Fed to extend large foreign currency swaps with foreign central banks. This would make the dollar carry trade slightly less desirable.
What would be the consequence for everyday people? Oh, that’s easy: the dollar carry trade will unwind, the stock market will crash, treasury yields will go negative, credit markets will freeze, and chaos will erupt. Or … the treasury secretary and the other members of the Fed will rubber stamp their approval (this would still be a huge plus for transparency). If I had to make a TV show based on one of these outcomes, however, I can tell you which one I’d choose.
