Paul McCulley on Fed buying 85% of Treasury's net debt issuance in the past 7 weeks

We’ve had a merger of monetary and fiscal policy. We’ve broken down the church-and-state separation between the two.

~ Paul McCulley, former chief economist at PIMCO, Bloomberg interview, May 15, 2020

(Credit to Philip Grant, editor of Almost Daily Grant's, for finding this quote. Also, according to May 15, 2020 ADG: "According to estimates from Bloomberg Economics, the Fed will purchase up to $3.5 trillion in government bonds this year, covering the bulk of an estimated $3.7 trillion fiscal shortfall.")

Paul McCulley on the ratings agencies

[The breakdown of our financial system] was about the invisible hand having a party, a non-regulated drinking party, with rating agencies handing out the fake IDs!

~Paul McCulley, PIMCO, as quoted by Bill Gross, date unknown

Paul Krugman and Paul McCulley on the cure for the 2001 recession

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

~ Paul Krugman, "Dubya's Double Dip?," The New York Times, August 2, 2002

Paul McCulley: Bernanke won't allow a depression

We are not going to have a depression. Ben Bernanke is not going to allow us to have a depression.

~ Paul McCulley, Pimco, as appeared on CNBC, December 27, 2008