Debt limit spat has unleashed QE3 by stealth

One of the unintentional side effects of the current impasse in Congress over raising the debt ceiling is that it has led to a significant expansion of the monetary base. Indeed, the drop in the Treasury's operating cash balance over the past few weeks has bizarrely had a much bigger impact than the Fed's latest round of asset purchases. Given the criticism of QE2 when it was introduced, it is rather ironic that Congress has unwittingly unleashed what amounts to QE3.