3 ms·
I think you're talking about reverse of QE. This will reduce bank's reserves at the fed, but doesn't affect money supply or retail deposits. When a private inve
by rr808 3y ago
I think you're talking about reverse of QE. This will reduce bank's reserves at the fed, but doesn't affect money supply or retail deposits. When a private investor buys a bond the cash goes to the seller, it doesn't disappear.
- cs702 3y agoThe cash that the US Treasury pays to the Fed as its bonds mature does disappear. Ditto for agency bonds that are repaid to the Fed.