3 ms·
That's their process of rolling over. They've specifically will at one point stop using the phrase in their monthly meetings, which means the bonds will be left
by akhatri_aus 10y ago
That's their process of rolling over. They've specifically will at one point stop using the phrase in their monthly meetings, which means the bonds will be left to mature - thereby destroying the money they created & shrinking the balance sheet - the bonds get taken off, as does the reserve balance created to buy them.
It's nothing new in fact its near bog standard. This process is done with the lower maturity instruments when interest rates are higher by matching it up to the federal funds rate by purchasing or selling them & rolling them over in the exact same fashion (with this 'printed'/reserve money as well). It's just this is done using longer term assets instead.
- gozur88 10y ago>That's their process of rolling over. They've specifically will at one point stop using the phrase in their monthly meetings, which means the bonds will be left to mature... That's the theory. I doubt it will ever actually happen, though, since whoever makes that decision will be blamed for any poor economic performance that follows.
- akhatri_aus 10y agoThis is why the Fed is apolitical. Their concern isn't with economic performance it's simply with full employment and inflation most and foremost. Even if it is at the cost of poor economic performance - infact that is the goal, thereby reducing inflationary pressure.
- gozur88 10y agoThe Fed isn't anywhere near as apolitical as it pretends. Fed chairmen are appointed by the president, after all, and approved by the Senate, just like any other high level political appointee.