Philadelphia Federal Reserve Bank President Charles Plosser warns of a "dangerous" breakdown in the traditional separation of monetary and fiscal policy and urges a restoration of "bright boundaries" between the two in an essay released Friday by his Bank.

Plosser, writing in the Philadelphia Fed's Annual Report, expresses concern that the Fed and other central banks will come under increasing pressure to "monetize" the "unsustainable" debts of their governments. He also urges the Fed and others to refrain from crossing the line and engaging in fiscal policy themselves.

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