toxic L toxicum, a poison; Gr toxicon, a poison, orig., poison in which arrows were dipped. 1. of, affected by, or caused by a toxin, or poison. 2. acting as a poison; poisonous n. a toxic substance; also, something contaminated by a toxic substance.
Many of the words being newly used these days are as toxic as the toxic assets we hear so much about.
This term was in vogue for a while, but it seems to be waning. That's good because it was being used to describe a common practice in the resolution of troubled banks that had never been called nationalization, with all its implication of socialism. Most financial TV commentators are too young to remember the banking or S&L crises of the late 1980s.
Take your pick: either the Fed has never printed money and still isn't, or the Fed has always printed money and is just doing it at a faster pace since last September.
Of course the Fed doesn't literally print money. Economists know that and are just trying to be dramatic when they use the term in the current context. I've come to realize, however, that many non economists believe that the Fed literally prints money.
You might say the Fed creates money when it purchases assets, but the public decides how much of the newly created money results in more printed currency. If the public wants more, it cashes checks at banks. If the banks' inventory runs low, they order more from the Fed. If the Fed's inventory runs low, it orders more from the Bureau of Engraving and Printing, which does print money.
"We've got to get the toxic assets off the banks' balance sheets." If we're talking about mortgage backed securities, I would say the banks don't have toxic assets on their balance sheets. Their MBS's are illiquid, because some of the mortgages behind them are defaulting and investors don't know where they are and have stopped trading. The second definition of toxic above might be stretched to say the securities have become toxic as they were contaminated by the toxic mortgages. I prefer illiquid for the MBS's because that better describes why banks may choose to hold them rather than sell them at fire sale prices. Besides, illiquid is less inflammatory than toxic and more accurate. The word toxic is itself toxic. We should remember that getting assets off a bank's balance sheet is a means to an end, not the end itself. Holding them to recovery serves the same purpose, which is to stop the unnecessary hemorrhaging of regulatory capital based on accounting principles that don't fit the circumstances.