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They might call it something else but the effect is the same as QE. The FED’s balance sheet has expanded by $300 billion in the past few days [0] That is equiva
by lowkey 4y ago
They might call it something else but the effect is the same as QE. The FED’s balance sheet has expanded by $300 billion in the past few days [0]
That is equivalent to the past 4 months of quantitative tightening.
This money is to be used to backstop insolvent banks and like all Fed created money it was created out of thin air. Make no mistake this will lead to even more inflation.
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[0] https://mobile.twitter.com/charliebilello/status/1636479879364460546/photo/1 https://mobile.twitter.com/charliebilello/status/16364798793...
Edit: added context to the size of the QE that the Fed claims isn’t really QE.
- HDThoreaun 4y agoThat's not what QE is and it does not have the same effect as QE.
- lowkey 4y agoIt’s a sudden expansion of the Fed’s balance sheet. What else would you call it?
- HDThoreaun 4y agoA loan to provide liquidity. QE is the systematic increasing of bond values. These loans will have no effect on bond value and therefore interest rates because they have high interest rates and need to be paid back quickly. They just give debtors enough time to sell a few assets and wait for the situation to calm down.
- lowkey 4y agoSee my edited comment above. The effect is to erase the past 4 months of quantitative tightening in a single week. We can agree not to call it QE but the effect is nonetheless inflationary as with all cases when the Fed creates money out of thin air, thereby diluting the purchasing power of all dollar holders.