4 ms·

Hogwash. The Fed can do only three things: (1) raise or lower the short term interest rates it charges financial institutions when they borrow from the Fed, (2

by cs702 4y ago

Hogwash. The Fed can do only three things: (1) raise or lower the short term interest rates it charges financial institutions when they borrow from the Fed, (2) raise or lower the short term interest rates it pays financial institutions when they park money with the Fed, and (3) buy and sell US treasury and mortgage agency bonds in the open market. And the Fed does these things to ensure financial and monetary stability. The OP strikes me as an ideologically driven piece that takes a few quotes from Powell completely out of context and manipulates them to fit a narrative that makes no sense whatsoever given what the Fed is (a central bank) and what it can do (change some rates it pays/charges and trade some government and agency bonds). To the mods: consider removing the OP. I doubt it fits the HN guidelines.

josh2600 4y ago
Does this also include the whole buying toxic assets thing? Not sure where that fits in your 3 options, but it’s definitely something they’ve been doing, to the tune of trillions of dollars.
- cs702 4y ago
  Anyone can see the current composition of the Fed's balance at https://www.federalreserve.gov/monetarypolicy/bst_fedsbalancesheet.htm https://www.federalreserve.gov/monetarypolicy/bst_fedsbalanc... -- the latest balance sheet is here: https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1 https://www.federalreserve.gov/releases/h41/current/h41.htm#... As anyone can easily confirm, US treasury bonds and agency-backed bonds constitute the vast majority of the ~$9T owned by the Fed today. During the global financial crisis, I believe the Fed was given permission (by the executive and legislative branches) to purchase other kinds of bonds, so it coulld maintain financial and monetary stability.
  - bradleyjg 4y ago
    I think there was a fallen angel fund at the start of Covid (corporates that had been highly rated but lost those ratings during the brief crash before the bubble).
- arcticbull 4y ago
  > Does this also include the whole buying toxic assets thing? Common misconception. The 2008 bail-outs weren't run by the Fed but by Treasury, and they weren't grants, they were loans that have been repaid yielding a $110B profit so far, with more to come. [1] > Not sure where that fits in your 3 options, but it’s definitely something they’ve been doing, to the tune of trillions of dollars. As you can see from the composition, 'toxic assets' amounted to a grand total of just 2.9% of the bail-out package ($18.6B). It was a one-off, it wasn't 'trillions of dollars' and it wasn't the Fed. [1] https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/
  - pjmorris 4y ago
    'toxic assets' may have been a misleading phrase here, but I think there is a component of federal Reserve assets you are overlooking that the poster rightly identifies, namely the amount of mortgage-backed securities currently on the balance sheet that weren't there pre-2008, about 2.7 Trillion worth [0]. Given that the entire Fed balance sheet was less than 1 Trillion at the end of 2007 [1], and composed mostly of US Treasuries at the time, it seems like it would have an effect on asset prices. [0] https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1 https://www.federalreserve.gov/releases/h41/current/h41.htm#... [1] https://www.federalreserve.gov/releases/h41/20071227/ https://www.federalreserve.gov/releases/h41/20071227/
KennyBlanken 4y ago
> To the mods: consider removing the OP. I doubt it fits the HN guidelines. The blog (which dresses itself to look like a news site) is the one-man work an editor of Grayzone, a known mouthpiece of the Kremlin and CCP. https://en.wikipedia.org/wiki/The_Grayzone https://en.wikipedia.org/wiki/The_Grayzone I'm not entirely up to date on my slang but I believe Norton probably fits the term "Tankie", given Grayzone (and by extension, its editors, including Norton) are Uyghur genocide denialists.
onlyrealcuzzo 4y ago
> (3) buy and sell US treasury and mortgage agency bonds in the open market. And the Fed does these things to ensure financial and monetary stability. Can't they buy corporate debt now, too?
IdontRememberIt 4y ago
Have you read the minutes of the FOMC? Because I did and it made me a little pessimistic. "We can't allow a wage price spiral to happen." So if you have counter arguments, it would really brighten my day and allow me to see the future a little less dark. Thanks.

by cs702 4y ago

josh2600 4y ago

Does this also include the whole buying toxic assets thing? Not sure where that fits in your 3 options, but it’s definitely something they’ve been doing, to the tune of trillions of dollars.

cs702 4y ago
Anyone can see the current composition of the Fed's balance at https://www.federalreserve.gov/monetarypolicy/bst_fedsbalancesheet.htm https://www.federalreserve.gov/monetarypolicy/bst_fedsbalanc... -- the latest balance sheet is here: https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1 https://www.federalreserve.gov/releases/h41/current/h41.htm#... As anyone can easily confirm, US treasury bonds and agency-backed bonds constitute the vast majority of the ~$9T owned by the Fed today. During the global financial crisis, I believe the Fed was given permission (by the executive and legislative branches) to purchase other kinds of bonds, so it coulld maintain financial and monetary stability.
- bradleyjg 4y ago
  I think there was a fallen angel fund at the start of Covid (corporates that had been highly rated but lost those ratings during the brief crash before the bubble).
arcticbull 4y ago
> Does this also include the whole buying toxic assets thing? Common misconception. The 2008 bail-outs weren't run by the Fed but by Treasury, and they weren't grants, they were loans that have been repaid yielding a $110B profit so far, with more to come. [1] > Not sure where that fits in your 3 options, but it’s definitely something they’ve been doing, to the tune of trillions of dollars. As you can see from the composition, 'toxic assets' amounted to a grand total of just 2.9% of the bail-out package ($18.6B). It was a one-off, it wasn't 'trillions of dollars' and it wasn't the Fed. [1] https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/
- pjmorris 4y ago
  'toxic assets' may have been a misleading phrase here, but I think there is a component of federal Reserve assets you are overlooking that the poster rightly identifies, namely the amount of mortgage-backed securities currently on the balance sheet that weren't there pre-2008, about 2.7 Trillion worth [0]. Given that the entire Fed balance sheet was less than 1 Trillion at the end of 2007 [1], and composed mostly of US Treasuries at the time, it seems like it would have an effect on asset prices. [0] https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1 https://www.federalreserve.gov/releases/h41/current/h41.htm#... [1] https://www.federalreserve.gov/releases/h41/20071227/ https://www.federalreserve.gov/releases/h41/20071227/

KennyBlanken 4y ago

> To the mods: consider removing the OP. I doubt it fits the HN guidelines. The blog (which dresses itself to look like a news site) is the one-man work an editor of Grayzone, a known mouthpiece of the Kremlin and CCP. https://en.wikipedia.org/wiki/The_Grayzone https://en.wikipedia.org/wiki/The_Grayzone I'm not entirely up to date on my slang but I believe Norton probably fits the term "Tankie", given Grayzone (and by extension, its editors, including Norton) are Uyghur genocide denialists.

onlyrealcuzzo 4y ago

> (3) buy and sell US treasury and mortgage agency bonds in the open market. And the Fed does these things to ensure financial and monetary stability. Can't they buy corporate debt now, too?

IdontRememberIt 4y ago

Have you read the minutes of the FOMC? Because I did and it made me a little pessimistic. "We can't allow a wage price spiral to happen." So if you have counter arguments, it would really brighten my day and allow me to see the future a little less dark. Thanks.