But, again, liquidity is less important for the long-term portfolio than neutrality. Third, some of the claims could be on financial institutions as a substitute for directly holding the loans and other primary debt (loans to households and businesses) that such institutions hold. The system could be managed internally or externally. I favor external management.
Specifically, we could ask for proposals for a mutual fund that would operate under some strict guidelines, related to appropriate indexing and asset quality. Holding the assets through a mutual fund could also distance the Federal Reserve from a management role in the companies issuing the equities. 2.