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Mega-Lithium OP t1_jdffjcy wrote

Reply to comment by Longjumping-Hair4691 in Fed Balance Sheet by Mega-Lithium

The Federal Reserve since 2008 has stuffed an 8.7 Trillion dollar warehouse full of shit they bought from the “Too Big To Fail” banks.

That shit is MBS (mortgages), Bonds and other financial instruments

In exchange, the banks got sweet, sweet cash they they were supposed to lend to everyone so we could buy cars, houses, start businesses and send our kids to college.

They lent some out the back door but also operated a gambling operation out the back door. Shady.

When Covid hit, they pumped so much money into the bloodstream of the economy that weird shit started happening. Companies that should have failed were kept afloat (zombies) People’s houses exploded in value and with zero rates they could refinance and buy a bunch of useless shit. That’s when your fellow Wall Street bets pals were trading GameStop with their magical internet money and using it to buy lamb is and monkey pics.

But, inflation started to accelerate. Basic law of economics is that when you shoot money out of tshirt cannons into the economy, prices for everything goes up.

To fight that, the federal reserve started making it more expensive to borrow money (raising the fed rate or “hiking”) They also started QT (selling shit from their warehouse)

which also has the nasty effect of breaking shit which is why Silicon Valley took the dirt nap.

In a panic, they started the whole QE thing again.

And…here we are

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ointw t1_jdfzn5y wrote

About QT, Fed didn’t sell anything, they just let bonds expired by keeping to maturity date.

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tslGUH t1_jdh7xy9 wrote

Most of that $8.7 trillion is not MBS

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Mega-Lithium OP t1_jdhgf7a wrote

Yes, around 2.6 Trlllion of it

https://fred.stlouisfed.org/series/WSHOMCB

Remember that the entire QE thing was supposed to be a very short term emergency fix back in 2010.

Ben Bernanke then Janet Yellen and now Jerome Powell have kept this thing going.

And, I interestingly, the GSEs (Fannie Mae & Freddie Mac) have been in “conservatorship” for 14 years!!! When do they just call that a nationalization?

They pumped liquidity into the economy and Blackstone private equity swallowed up all the houses.

Why?

So we are a nation of “have nots” and renters

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nasty_nater t1_jdhlsmv wrote

Literally just watched the HBO movie Too Big To Fail.

Wonder if the producers knew they would just continue doing this shit more than 10 years later…

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Mega-Lithium OP t1_jdhp6ll wrote

Watch list:

The Big Short Too Big To Fail FRONTLINE- The age of easy money

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