Explainer: From 'loathsome' to routine, Fed has a well-rehearsed debt-limit playbook

Those measures include routine steps the Fed already takes daily to grease the country's key financial markets, as well as some less conventional measures - "loathsome" was the word Powell used to describe some of the options during a 2013 debt limit discussion when he was still a relatively new member of the Fed's Board of Governors - that might come into play depending on how bad things get.The U.S.

"If there were pressures pushing the funds rate higher the would automatically add reserves to deal with that," William English, a Yale School of Management professor, said in a recent interview. As head of the Fed's monetary affairs division at the time, it was English who briefed officials in 2011 on possible options.

A step English said the Fed could take to limit the damage without much legal or political peril would be for it to accept any defaulted Treasury securities as collateral for its standing programs.

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