4 ms·

And all that money they're paying in interest... how do they argue that those interest payments won't find its way back into the economy and further fuel inflat

by jarym 4y ago

And all that money they're paying in interest... how do they argue that those interest payments won't find its way back into the economy and further fuel inflation?

than3 4y ago
Likely because its being held at the top at one of the primary dealers until they choose to use some of it. Maybe there's an agreement that they won't use it?
- Ancalagon 4y ago
  Proof that trickle-down is a farce!
  - doubleg72 4y ago
    Idk if this is sarcasm or if you really don't know what trickle down is.
RockyMcNuts 4y ago
following this statement to its logical implications, if they lower interest rates even further below a Taylor Rule, then that would be deflationary since less money would find its way back into the economy and fuel inflation? by not printing money they are printing money or something..cough...tell me you don't understand monetary policy without telling me you don't understand monetary policy. the money they lose when rates go up is of no more significance than the profits they make when they create high-powered reserves. everything on the Fed's balance sheet is outside the real economy. what matters to the real economy is the current nominal and real interest rates and the expectations for where they are going. net income (as opposed to cash flow) is mostly a fiction in general but all the more so when it's the Fed. these stories amount to "boo! OMG big numbers! Zurg say stop doing economics, they have played us for absolute fools" https://ifunny.co/picture/stop-doing-economics-eyears-of-yet-economists-cannot-predict-recessions-bNTPGGKKA https://ifunny.co/picture/stop-doing-economics-eyears-of-yet...
- jarym 4y ago
  > Fed losses from its interest-rate-risk exposures—unrecognized taxpayer losses—are now being realized in ways Congress never intended and at magnitudes neither the Congress nor the Fed ever expected. When things happen that congress or the Fed never expected (aka the 'experts' and 'planners' in all this)... that should ring alarm bells. Those saying 'nothing to worry about' are putting on a brave face. Shouldn't need to understand economics to see that much.
  - RockyMcNuts 4y ago
    like an army of MIT PhDs didn't model obvious 1st-order effects literally everyone who knew anything expected it, it's built into every model what is supposed to happen if the Fed reports book losses or negative equity. hard to go bankrupt if you can literally print money. stupidest FUD and agitprop and unfortunately typical of the WSJ opinion section
imtringued 4y ago
If the government is borrowing money or issuing money to pay interest then yes, otherwise no.
throw0101b 4y ago
Those are interest payments on reserves. Reserves can only be used in bank-to-bank settlements, and not useable by any institution that isn't part of the Fed's system.

by jarym 4y ago

And all that money they're paying in interest... how do they argue that those interest payments won't find its way back into the economy and further fuel inflation?

than3 4y ago

Likely because its being held at the top at one of the primary dealers until they choose to use some of it. Maybe there's an agreement that they won't use it?

Ancalagon 4y ago
Proof that trickle-down is a farce!
- doubleg72 4y ago
  Idk if this is sarcasm or if you really don't know what trickle down is.

RockyMcNuts 4y ago

following this statement to its logical implications, if they lower interest rates even further below a Taylor Rule, then that would be deflationary since less money would find its way back into the economy and fuel inflation? by not printing money they are printing money or something..cough...tell me you don't understand monetary policy without telling me you don't understand monetary policy. the money they lose when rates go up is of no more significance than the profits they make when they create high-powered reserves. everything on the Fed's balance sheet is outside the real economy. what matters to the real economy is the current nominal and real interest rates and the expectations for where they are going. net income (as opposed to cash flow) is mostly a fiction in general but all the more so when it's the Fed. these stories amount to "boo! OMG big numbers! Zurg say stop doing economics, they have played us for absolute fools" https://ifunny.co/picture/stop-doing-economics-eyears-of-yet-economists-cannot-predict-recessions-bNTPGGKKA https://ifunny.co/picture/stop-doing-economics-eyears-of-yet...

jarym 4y ago
> Fed losses from its interest-rate-risk exposures—unrecognized taxpayer losses—are now being realized in ways Congress never intended and at magnitudes neither the Congress nor the Fed ever expected. When things happen that congress or the Fed never expected (aka the 'experts' and 'planners' in all this)... that should ring alarm bells. Those saying 'nothing to worry about' are putting on a brave face. Shouldn't need to understand economics to see that much.
- RockyMcNuts 4y ago
  like an army of MIT PhDs didn't model obvious 1st-order effects literally everyone who knew anything expected it, it's built into every model what is supposed to happen if the Fed reports book losses or negative equity. hard to go bankrupt if you can literally print money. stupidest FUD and agitprop and unfortunately typical of the WSJ opinion section

imtringued 4y ago

If the government is borrowing money or issuing money to pay interest then yes, otherwise no.

throw0101b 4y ago

Those are interest payments on reserves. Reserves can only be used in bank-to-bank settlements, and not useable by any institution that isn't part of the Fed's system.