2 ms·
Not all in the same day. If you loan $30, then take it back the next day for 10 days in a row, you're still just moving around $30, not $300
by chaorace 7y ago
Not all in the same day. If you loan $30, then take it back the next day for 10 days in a row, you're still just moving around $30, not $300
- NovemberWhiskey 7y agoThere are two separate things going on here; although both of them intended to relieve pressure in the money markets. Firstly, there's a so-called "reserve management operation" which is intended to increase reserves held at the Fed by purchasing Treasury bills. Increases in reserves implies greater liquidity to support money market activities. This definitely shows up as a growth in the Fed balance sheet, as the policy is to roll into new Treasury bills at maturity. Secondly, there's an ongoing campaign of overnight and term repo operations where necessary to achieve the policy target rates. These are short-term, and do not result in a significant balance sheet growth. See the statement from the NY Fed: https://www.newyorkfed.org/markets/opolicy/operating_policy_191011 https://www.newyorkfed.org/markets/opolicy/operating_policy_...
- pg_is_a_butt 7y agoIf you loan $30 of pretend money and the borrower then puts that money to work and makes $3 in real money profit then pays back the $30 of pretend money for 10 days in a row, the borrower still has $30 in real money based entirely on fake money.
- SkyBelow 7y agoThe impact depends upon if the market knows you will or won't continue to lend if it fails to be paid back.