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Don’t quote me on this, pretty sure I’m wrong. The Fed bought assets (with the agreement to give it back for even higher rates of return). I heard one interpret
by hall0ween 5y ago
Don’t quote me on this, pretty sure I’m wrong. The Fed bought assets (with the agreement to give it back for even higher rates of return). I heard one interpretation of this being that the moneys worth less than the assets and the fed is looking for ways to incentivize financial institutions to take money.
- ganoushoreilly 5y agoYes, govt bonds are looked at as not reliable and the fed is incentivizing the purchase of the bonds nightly with additional interest. Problem is this is to stave off excess inflation, but it ironically will create it.
- wtn 5y ago> the fed is looking for ways to incentivize financial institutions to take money Right, the current situation is a money market "plumbing" issue; there are more deposits than banks can handle due to GSIB balance sheet regulations. Here's some background info: https://fsforum.com/news/fixing-whats-broken-the-gsib-surcharge-near-and-long-term-problems https://fsforum.com/news/fixing-whats-broken-the-gsib-surcha...