3 ms·

In the US, almost every of the 50 states must balance their budgets. They can't spend what they don't have without selling debt (municipal bonds that pay intere

In the US, almost every of the 50 states must balance their budgets. They can't spend what they don't have without selling debt (municipal bonds that pay interest). They can't manufacture money as that is handled at the Federal level. https://www.ncsl.org/research/fiscal-policy/state-balanced-budget-requirements-provisions-and.aspx https://www.ncsl.org/research/fiscal-policy/state-balanced-b...

misja111 6y ago
Sure, but the FED money is going somewhere in the USA. Either to banks or other companies. Those companies are located in states. So eventually the FED money flows to those 50 states. But it apparently doesn't reach local companies and people, or maybe it does but then it quickly leaks away again. I wonder why that is.
- rapsey 6y ago
  FED money goes into banks and stocks. Cities do not get any of that FED QE money.
  - arthurcolle 6y ago
    Fed has been buying munis
    - lbotos 6y ago
      I haven't been paying close attention and I'm wondering if you know: Are they buying newly issued munis or buying them on the open market?
      - arthurcolle 6y ago
        It's both. Here is some information on the Municipal Lending Facility: https://www.federalreserve.gov/monetarypolicy/muni.htm https://www.federalreserve.gov/monetarypolicy/muni.htm
- lifty 6y ago
  A lot of it is going into prop-ing up corporate debt. I remember that they even bought junk rated bonds.
  - ummonk 6y ago
    I don't think they ended up having to buy them as the mere promise to buy them was enough to get private investors to boost junk bond prices.
  - mrep 6y ago
    Looking at the most recent balance sheet [0], corporate bonds look to be under the other securities section which has 86 billion in assets or about 1.2% of the asset sheet. Most of the balance sheet is taken up by U.S. Treasury securities and Mortgage-backed securities. [0]: https://www.federalreserve.gov/releases/h41/current/h41.htm https://www.federalreserve.gov/releases/h41/current/h41.htm
- splintercell 6y ago
  My understanding is that the FED is printing money for international demand.

misja111 6y ago

Sure, but the FED money is going somewhere in the USA. Either to banks or other companies. Those companies are located in states. So eventually the FED money flows to those 50 states. But it apparently doesn't reach local companies and people, or maybe it does but then it quickly leaks away again. I wonder why that is.

rapsey 6y ago
FED money goes into banks and stocks. Cities do not get any of that FED QE money.
- arthurcolle 6y ago
  Fed has been buying munis
  - lbotos 6y ago
    I haven't been paying close attention and I'm wondering if you know: Are they buying newly issued munis or buying them on the open market?
    - arthurcolle 6y ago
      It's both. Here is some information on the Municipal Lending Facility: https://www.federalreserve.gov/monetarypolicy/muni.htm https://www.federalreserve.gov/monetarypolicy/muni.htm
lifty 6y ago
A lot of it is going into prop-ing up corporate debt. I remember that they even bought junk rated bonds.
- ummonk 6y ago
  I don't think they ended up having to buy them as the mere promise to buy them was enough to get private investors to boost junk bond prices.
- mrep 6y ago
  Looking at the most recent balance sheet [0], corporate bonds look to be under the other securities section which has 86 billion in assets or about 1.2% of the asset sheet. Most of the balance sheet is taken up by U.S. Treasury securities and Mortgage-backed securities. [0]: https://www.federalreserve.gov/releases/h41/current/h41.htm https://www.federalreserve.gov/releases/h41/current/h41.htm
splintercell 6y ago
My understanding is that the FED is printing money for international demand.