Crazy, post-midnight thoughts on fiscal and monetary policy

When inflation is too low and you've hit the zero bound on the monetary side, and debt is too high to do anything on the fiscal side, you need to break the last taboo: direct financing of government debt by the Fed.

The only thing the Fed needs to do is to announce it fully intends to keep x amount of government bonds purchased under QE in its books till maturity - with the benefit naturally accruing to the Treasury. There would need to be some clarity on exact numbers so that nobody panics, but that's basically it.

A crazy idea - but note that this is merely a quantitative, not qualitative, deviation from the standard arrangement (even in normal times).