Comment by hammock

> “Federal reserve note”

That isn't a backstop, it's a direct obligation. It's also, like, not a real one? You can't redeem notes for specie. The term originates from when you could redeem dollars for metal. The Fed did play a role in backstopping that guarantee.

> know they don’t backstop jack squat but in practice there is a fed put

Sure. That isn't the same as a backstop. Backstops are hard–the Fed can't turn away an eligible borrower at the discount window. The Fed put is soft–the Fed will let market participants fail to send a message.

Going back to the top, it is incorrect to say the Fed backstops M2. This wouldn't be a footnote in a central-banking discussion, it would be something that would get called out as a screwup.

> How about what’s the amount from banks that the fed would willing lend as a last resort?

Infinity. The Fed mainly accepts Treasuries as collateral, but it can and has expanded the definition of good collateral in crises. There is no legal or frankly practical limit on how much money the Fed can create. Its only constraint is ultimately political. (Which is in turn mostly a function of inflation and employment and I guess now social media vibes.)

If you're looping this back to Nvidia, yes, I never claimed Nvidia has more lending capacity than the Fed. What I said was it's interesting that in practice, Nvidia appears to have created more money (if we're being pedantic, M3 which turns into M1) than the Fed has in that time. The Fed wasn't particularly trying to ease financial conditions in that time, so this is more of a curiosity tied to the title than a statement of capability.