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VisualMod t1_jdf6738 wrote

The Federal Reserve's total assets grew by $400 billion in the week ending March 22, 2023, to a record high of $8.73 trillion. The central bank's holdings of Treasuries and other government-backed securities rose by $300 billion during the week, while its holdings of mortgage-backed securities increased by $100 billion.

2

erednay t1_jdf6jk8 wrote

Thank you for your diligent work fighting inflation, Mr. Powell.

272

Gandalfs_Shaft48 t1_jdf6vag wrote

THE BANKING SYSTEM IS SOUND AND RESILIENT AND STRONG AND SOUND!!!

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192838475647382910 t1_jdf6yez wrote

Everyone calm dooown.. this is fineā€¦ FED safe, banks safeā€¦ eeeasy nowā€¦ keep it movinā€¦

5

beavisbutts t1_jdf7xz3 wrote

nothing to see here folks. move along. move along. I SAID MOVE ALONG!!!

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Mega-Lithium OP t1_jdf8n4k wrote

Effectively a $400 billion dollar money drop

5

hellish0098 t1_jdf8x2g wrote

šŸ¤”šŸ¤”šŸ¤”šŸ¤”šŸ¤” letā€™s raise rates by 1% JPā€¦!! Print print print, we can get to 1T!

4

DYTTIGAF t1_jdf96t0 wrote

The Federal Reserve has no discipline. One reaction regardless of the problem: just throw money at it.

Doesn't matter if it's a banking crises, or a virus, or unemployment, or fraud, or economic downturn, etc.

They are a one trick pony that backs up the truck and fills it with cash. Next takes it to the helicopter to dump it on whatever problem that requires a thoughtful solution.

It will work (until it doesn't). No free lunches...and the check is now on the table.

Who's gonna pick it up? Taxpayers.

63

readonlypdf t1_jdfa0bh wrote

Fucking someone destroy the money printer.

23

Longjumping-Hair4691 t1_jdfbysv wrote

Can someone explain to me whatā€™s going on? I do not know any of the terminology all of you use. Should an average blue collar guy like me worry about whatā€™s going on? Also, whatā€™s up with you guys and Wendyā€™s?

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Mega-Lithium OP t1_jdfd4ok wrote

QE or Quantitative Easing was an experiment by Federal Reserve Chairman Ben Bernanke after the 2008 Great Financial Crisis.

Prior to that, they tried dropping the Federal Reserve Rate to 0%. It didnā€™t work.

So, they decided to give the Too Big To Fail banks an obscene amount of money in hopes they would lend it to people and jumpstart the economy. They did this by buying financial assets FROM the banks.

Did the banks start making loans? Of course not!

They started betting on the assets they they just sold to the Fed. THEY PAID THEMSELVES BONUSES AND bought the financial assets that they knew the Federal Reserve was trying to raise the value of.

There were protests, remember the 99% marches on Wall Street?

so QE is this shitshow and QT is the opposite (Quantitative Tightening) where the Federal Reserve sells or allows assets to run off the balance sheet.

Remember that 2.8 Trillion of the 8.7 Trillion is MBS or Mortgage Backed Securities (the dogshit Jenga tower from ā€œthe Big Shortā€) and that Fannie Mae & Freddie Mac have been nationalized (aka a 14 year ā€œConservatorship ā€œ ) since then.

So Jay Pow raised the fed rate by .25 (to not spook markets) while SIMULTANEOUSLY pumping $400 billion into banks via this scumbag scheme called QE

What does this mean?

I have no idea, Iā€™m just some dude on Reddit

Edit- removed stuff about the tea party. Not essential

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SeemoarAlpha t1_jdffdrf wrote

It's a $400 billion dumpster fire extinguisher. It isn't particularly inflationary since it is unlikely this bank liquidity replenisher will result in banks making more loans and expanding the money supply.

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Mega-Lithium OP t1_jdffjcy wrote

The Federal Reserve since 2008 has stuffed an 8.7 Trillion dollar warehouse full of shit they bought from the ā€œToo Big To Failā€ 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) Peopleā€™s houses exploded in value and with zero rates they could refinance and buy a bunch of useless shit. Thatā€™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 ā€œhikingā€) 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.

Andā€¦here we are

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Mega-Lithium OP t1_jdfhcp3 wrote

TLDR Banks always win

IAT (iShares Regional Bank ETF) or VFH (Vanguard Financials ETF)

2

Mega-Lithium OP t1_jdfi3pl wrote

The point of lighting the dumpster fire in the first place was to ā€œcreate painā€

Pain = unemployment and inflation decreasing

Saving the day every time a shit bank implodes is counterproductive

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Accomplished-Heat301 t1_jdfp41u wrote

Quantitative tightening has turned out to be a complete joke. They're stimulating the economy while tightening interest rates at the same time. img

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Dark_Tint t1_jdfqf90 wrote

You havenā€™t seen anything yet

1

BooBeef t1_jdfqtn2 wrote

Tea Party Republicans were the opposite of what you said, they didnā€™t want the fed to be bailing out banksā€¦ unlike the moderate republicans and democrats who have no spines

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arpatel530 t1_jdfqxij wrote

We will just print forever. Inflation will stay forever. AI will pump the 7 main stocks and indices will be saved.

4

Distinct_Nectarine78 t1_jdft5rk wrote

This looks similar to my weight loss journey. One more pizza wouldn't hurt would it.....

5

captmorgan50 t1_jdfu6m9 wrote

Orginal TARP was 750B and took lots of discussion and a congressional vote. Now they spend 400B on a Sunday and it isnā€™t even discussed on Monday

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SeemoarAlpha t1_jdfvu56 wrote

Kind of depends, some banks need the liquidity to satisfy withdrawals or anticipated withdrawals. Many that are withdrawing are buying short term treasuries or putting it in money markets and that does have an effect on shorter duration bonds. As you move out the yield curve, look at the unprecedented whipsawing of the 2-year treasuries, the 10 year hasn't been as violent. The 10 year is what impacts the mortgage rates. Business loans are in the middle and that's where the fed wants to extinguish demand to reduce the money supply and quell inflation. It isn't an exact science and throw in the lag effect and you can see how mistakes can be made on the upside and the downside.

1

domomymomo t1_jdfvym1 wrote

Sometimes is better for the economy to let failed companies to die off and let newer and smarter ones to take its place.

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Malamonga1 t1_jdfwp6x wrote

Powell : "it's not the same as QE because QE has a downward effect on long term interest rate while this only serves to improve liquidity"

10 year interest rate in the last 20 days : down 0.7% from 4.1% to 3.4%.

On the other hand, the amount of increase on the Fed balance sheet just proves how many small/mid size regional banks are in deep shit.

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Rang_Dipkin t1_jdfx5jo wrote

Someone needs to tell them this isnt how you do QT

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bbmak0 t1_jdfxb6v wrote

400b so far, and I see there is a support level on 8339, and it looks like Fed's ass is going back above to 9000

1

Zestyclose_Meet1034 t1_jdfznu6 wrote

I know we joke but thatā€™s pretty close to an end of an entire empire soon enough

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DYTTIGAF t1_jdg0yjw wrote

Currency was created and inserted into the economy nonetheless. What happens when banks "do what they're supposed to do" which is lend it out and leverage that pile of capital 10X or more?

They have 0% reserve requirements since those restrictions were lifted during COVID.

It's not this particular instance but the steady stream of customers (Signature, First Republic, etc.). Who's next U.S. Bancorp, or Comerica?

The solution is accountability. Fraud and loss cannot constantly be subsidized. It's the moral hazard. Banks saying: "Fuck it. Let's be stupid. The Fed will make us whole".

There's no discipline. Every skinned knee get to go to the emergency room paid for by a third party.

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danielthelee96 t1_jdg2lk9 wrote

Just imagine CPI/PPI in a couple of months šŸ˜‚šŸ˜‚šŸ˜‚šŸ˜‚

3

ejohns19 t1_jdg4ys2 wrote

Can you expand this to like 20 years? Thanks

1

Intelligent_Oil86 t1_jdg5ysm wrote

Wasn't the BFTP a separate facility and not related to their balance sheet?

1

SeemoarAlpha t1_jdg644c wrote

Well that's the source of volatility isn't it? Some people get it, some don't, and they fight it out in the markets. The spectrum of "smart money" still follows the Gaussian distribution curve. Quiescent markets then converge on the reversion to the mean. Along the way, volatility is the mother's milk of the quant arbs, quietly vacuuming up the nickels and dimes of the frenetic who won't miss them.

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versello t1_jdg6ay9 wrote

Wasnā€™t it $300 billion last week?

1

neutralpoliticsbot t1_jdga0xa wrote

Them just bagholding is a lot less inflationary than just sending people checks. This is way better.

People got those $1,200 checks and ran straight to the car dealerships

1

LegendsLiveForever t1_jdgavop wrote

That's not how that works...

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

Banks create loans out of thin air.

​

MMTā€™s view of how the credit mechanism works has since been confirmed by publications of the Bank of England and the Deutsche Bundesbank. This proves the conventional money supply theory to be scientifically outdated, because it claims that commercial banks are dependent on savings or central bank balances for lending, i.e. they ā€œlendā€ savings or central bank deposits when they extend credit.

​

​

https://ibb.co/HBNSCyg - QE DOES NOT cause inflation.

−5

Ductard t1_jdgawi7 wrote

How do we make money from fed balance sheet to the moon?

1

DYTTIGAF t1_jdgd59m wrote

Sure. I heard those explanations 3 years ago. That's why the Federal Reserve has had to raise rates 9 times to address the problems associated with "theories" of how things are supposed to happen and the "reality" of what actually did.

1

Alien8w8 t1_jdge0vg wrote

But but but..... it wasn't a bail out and QE was done.

Fucking pretend rich people...

1

12zoro t1_jdgexov wrote

They could get the money down by only 400b before things started breaking lol. By this time next year, the balance sheet will be around 12T just to keep things steady and then we zoom to hyperinflation

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nyse125 t1_jdglaw5 wrote

We've known about why this uptick is in the chart and Jpow even clarified for the idiots who are still clueless about it during the fomc meeting. Basically, with BTFP, they're lending short term liquidity to banks to cover deposits if need be. The balance sheet will go down a year from now as QT is still in play.

1

VinnyEnzo t1_jdgnh3b wrote

165 million eligible working people could've gotten a $2500+ stimulus check with that money and let a few shit banks fail in the mean time.

2

DYTTIGAF t1_jdgpeww wrote

You do realize these banks use their balance sheets for collateral?

We're getting ready to seen a tsunami of withdrawals in the next 60 days once the public's recognition of the fact takes hold that the FDIC can cover just 1.5% of all demand deposits.

Businesses, non profits, LLC, teaching institutions, and of course retirees holding above $250,000 with bank CD's all decide to seek saftey immediately.

Your going the see the folly of the decision to drop the reserve requirements to 0%.

MMM does not calculate "fear and greed" in any of its theoretical assertions. It leaves out the nastiness of a capital collapse from consideration. It leaves out the brutality and fear of the counter parties in a financial transaction.

I've been there. I've experienced it first hand. This is the moment that all the undisciplined behavior by these banks is going to be discovered and brought to the light.

Banking and capital preservation needs a "hard discipline" to make sure capital allocation is accountable and controlled.

Otherwise (as you saw with Credit Suisse last weekend) executives run for cover and all the skills that were supposed to keep a collapse from happening... disappears.

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TVanTheMan636 t1_jdgspt3 wrote

Iā€™m no chart expertā€¦ but I think weā€™re all going to be LIVING IN A VAN, DOWN BY THE RIVER!!

2

DYTTIGAF t1_jdgv8tx wrote

No. That would be the nationalization of the banking system for the $19 trillion sitting in deposits (if people lose confidence). You can only play this game for so long. The FDIC as of last week had $128 billion and the balance sheet of the Fed is at almost $10 trillion. This would make the US Dollar worthless.

The US Dollar would be crushed. We are at risk of losing Reserve Currency Status if this gets out of control.

It's the mentality the Fed can : lend, promise, backstop, and securitize their way out of this jam.

Remember in 2008 they had a balance sheet of less than $1 trillion. Now in 2023 it's $10 trillion.

0

nyse125 t1_jdgvzdf wrote

Unless the fed, for whatever reason, stop or cannot provide temporary liquidity then sure you can debate ifs and how's. The fact of the matter remains, BTFP is here to give temporary ease while their balance sheet should reduce a year from now.

Considering the fact that BTFP is a new isntallment in their toolkit, assumptions regarding this is nothing but a baseless conspiracy. US dollar can absolutely not be destroyed in this process because while BTFO is a deflationary process, as rate cuts kick in eventually everyone will conveniently forget about the possible problems this "would've" caused.

1

DYTTIGAF t1_jdgxt5p wrote

No. It's confidence in the currency that cannot remanufactured with policy statements.

Please document in the last 30 years when the Federal Reserves "toolkit" has reversed the dollars decline in purchasing power. You can submit 1 example (not hard).

The truth is you cannot. It's just one on acronym after another (QE #1-#4, Operation Twits, PPP supported check dispersonal, Corpirate Debt Purchading Normalization, etc).

The destruction of the currency will occur with a 25% decline (its the 1 to 100 leverage in the currency futures markets that would create the choas).

We shall find out soon. I personally give the Federal Reserve 60 days before price discovery in the currency markets concludes the Russian ruble, or Chinese yuan will offer a better store of value than the US Dollar.

We fund our national debt with short term sovereign debt products such as T-Bills and Notes. You have investors worldwide who are watching the principle destruction occurring on the balance sheets of the banks.

They're not stupid. Why would they roll over that debt for another 6 months to a year? They won't (resulting in a no bid at the debt auctions).

This is the real dilemma the Treasury is staring down tonight.

We shall see.

0

Poopoopeepeepuke t1_jdhcmi6 wrote

Milk $20 a gallon coming to a store near you. Good thing stealing less than $900 is only a misdemeanor in California. Walmart might have to start feeding my family if things donā€™t get better soon.

1

KingFIippyNipz t1_jdhg4r1 wrote

'it is unlikely that the assholes who spend other people's money to make their own money will not do the same with this new $400 billion that they've done with every other dollar they ever came across'

​

yeah... unlikely....

1

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 ā€œconservatorshipā€ 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 ā€œhave notsā€ and renters

1

Sea-Sherbert3338 t1_jdht6q0 wrote

I might be regarded but how did the ā€œ25 billionā€ BTFP fund turn into 400 billion in 2 weeks???

1

rickylong34 t1_jdhvmgw wrote

Nerds explain how printing money isnā€™t inflationary

1

TSLA240c t1_jdhw559 wrote

Do you honestly believe banks will magically be liquid in a year?

The second the Fed goes to unwind this program it will put us right back in the same boat. This happens every single time the Fed attempts to unwind itā€™s ā€œtemporaryā€ liquidity programs.

The only way to unwind debt is to bankrupt it or monetize it, borrowing from Visa to Amex is a stall tactic not a solution.

0

nyse125 t1_jdi6ujq wrote

You honestly believe fed won't concoct some more bullshit to kick the can down the road as long as the massive bubble of everything still remains affordable to live under?

As long as QT is still in play this is hardly an issue. Fed might as well outright bail them out than resorting to BTFP even a year from now to avoid any stress in the financial markets as they always do.

1

RCB1424 t1_jdidv7f wrote

Think thereā€™s resistance at like 8.8T or so. Can resume downtrend if it fails there.

1

TSLA240c t1_jdifaxz wrote

They will absolutely come up with some more bullshit to kick the can with things already unaffordable.

QT isnā€™t in play any more, theyā€™ve undone the last 5 months in a matter of 2 weeks. This endless monetization of debt instead of allowing it to bankrupt out naturally just increases the money supply causing inflation. The Fed is simultaneously raising rates to slow inflation while injecting cash to permanently monetize bad debts that can never be repaid.

1

nyse125 t1_jdiit6t wrote

> theyā€™ve undone the last 5 months in a matter of 2 weeks.

I dont think you understand how BTFP works. The "spike" in the balance sheet isnt QT being turned off but after the treasury interest is forfeited, the balance sheet should go back down a year from now. Again, this is literally providing temporary liquid to the banks. If QT was undone we wouldn't have a single red day this past week.

1

TSLA240c t1_jdil6gl wrote

The Fed is still slowly allowing government bonds to lapse while simultaneously buying new bonds from banks to the tune of a net gain of +400b over the past 2 weeks, thatā€™s QE not QT.

And here I thought you understood that this isnā€™t going to be temporary. Banks will be in no better position a year from now when these bonds start to lapse and the Fed begins some new ā€œtemporary and definitely not money printingā€ program.

1

BuyLowThenSellLower t1_jdinivd wrote

Maybe just turn it down, but then instead, make it so money creation is only done by giving people negative tax rates that pays then money, and a inverse progressive system where the poor get back more negative taxes than the higher earners would.

I think this would then actually stimulate the economy

2

TSLA240c t1_jdj7h0r wrote

BTFP in the short term is definitely inflationary it converts bad/long term debts into cash monies. It only becomes deflationary when all those bonds are repaid to the Fed in a year removing the ā€œtemporarilyā€ added liquidity from the economy. Which, I mean, come on.

Also your sauce was last updated Feb 28

1

nyse125 t1_jdj8zb2 wrote

Wrong. BTFP is when banks give the fed their treasuries and receive money in return, BUT AGREE TO SWAP BACK IN ONE YEAR. It looks the same on balance sheets, but itā€™s wildly different, especially because this deal is structured as a loan and the banks PAY overnight plus 10 bp for the privilege.

If a bank takes out 100B in BTFP, 1 year from now they will need to pay the fed 100B, plus ~4.5B in interest on the loan, AND they forfeit the ~2.5B on the treasuries interest. From the perspective of the fed, their balance sheet INCREASES by 100B right away, and then DECREASES by $107B in one year.

Literally the only reason for banks to take this loan is to give cash to depositors who are making withdrawals. It costs the bank -7% annualized. They do this to avoid realizing a -40% loss by selling treasuries to raise cash to give depositors.

Contrast this with QE, where the fed buys the treasuries from the banks for twice what they paid for them, and banks realize a 50% gain overnight and get to keep it forever.

Wildly different.

You will also not get "up to date" information anywhere on the M2 money supply.

1

Crazy_Beat_36 t1_jdjb7ft wrote

Itā€™s like me and my credit cards or me and my thinkorswim account or me and my casino card. Am I regarded?

1

TSLA240c t1_jdjdgnb wrote

Youā€™re literally describing QE.

> Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity.

The central bank is buying bank securities to stimulate economic activity by ensuring liquidity keeps flowing.

What gives you any indication that in a year when the Fed asks for their $400b+ back the banks will be in any shape to repay?

The Fed hasnā€™t ever been able to string together 12 months of QT but surely this time it will be different.

1

nyse125 t1_jdjeyyz wrote

A year is a long way away for the Fed not to be just like - yeah keep it, which is the most likely scenario what you'll see a year from now and maybe then you can cheer QE. So no, it is not QE now because their balance sheet in this case goes down a year from now as it stands, as I have said many times just now.

QE = Banks realize a hefty gain and keep their bonds forever

BTFP = Take a mild loss but protect your depositors as Fed will give temporary liquidity.

There would be no reason for equities and bonds to drop if this was literally QE. Those definitions for QE and BTFP are nuanced so unless you don't see it in action it doesn't paint the entire picture.

1

LegendsLiveForever t1_jdjkmw7 wrote

If, as some claim, the sale of new Treasury securities inhibited spending which kept prices from rising, then QE would have done the reverse, which it didn't. QE (QT) is just another bank buying (selling) gov securities.

In Japan, 0% rate policy for some 30 years along with massive 'money printing' QE, debt/gdp over 200%, minimal natural resources. Not without problems, but world class public infrastructure, universal healthcare, education, low unemployment, low inflation.

Source: https://ibb.co/12pw2Q0 https://ibb.co/Tt3qWdX

any bank can operate indefinitely with negative equity if the regulators allow it and continue to insure its deposits etc.)

https://ibb.co/tsgMS0L

1

TSLA240c t1_jdjngne wrote

Itā€™s QE now because they are exchanging an illiquid asset for a liquid one. In a year if they repay it you can say itā€™s not QE.

I have no idea what youā€™re talking about QE always carries an interest rate with it, are you confused with government bailouts or the repo market?

Equities have been mixed but not down considering what a shit show of a week itā€™s been. Itā€™s also possible this fresh liquidity will just blunt the effects of the rate increases.

0

TheHamburgler8D t1_jdk0pty wrote

TLDR; buy goldā€¦ bc the fed made sure as shit you canā€™t buy crypto

2

the_shalashaska t1_jdkby4v wrote

Ok, got it. Youā€™re vouching for the same ā€œlet ā€˜em dieā€ policies that led to the Great Depression and GFC.

You donā€™t understand the entire concept of fractional reserve banking is built on simple trustā€¦trust that you will get paid back. When that trust goes away, everything falls apart.

The only way to maintain that trust is to print print print. There is no other way this system survives. Once you realize that, you just ride the waves.

1

DYTTIGAF t1_jdklkcg wrote

No. You don't get it. Accepting fraud and poor management of customers capital is not something that should be accepted as good behavior.

"Riding the waves" of incompetence is something I just need to accept? Please explain to me where did you come up with such brilliant insight? A child thinks this way.

You logic suggests the underlying currency (the US Dollar) can withstand a perpetual train of corruption without investors every questioning its value and stability. We should just ignore common sense because things will just magically fix themselves? Good luck with your thesis.

1

nyse125 t1_jdkuk8w wrote

> Itā€™s QE now because they are exchanging an illiquid asset for a liquid one.

How many times bruh, it is NOT. LMAO. Just becaise its an asset swap does not make it QE. It's a temporary backstop from the fed. What's not clicking?

1

TSLA240c t1_jdkxos3 wrote

Whatā€™s not clicking for you? You canā€™t just say itā€™s not then contradict yourself.

QE is an asset swap. Itā€™s a swap of cash (asset) for government/corporate bonds (asset).

There is an argument that itā€™s not ā€œmoney printingā€ since it has to be ā€œrepaidā€ but since the Fed just rolls over the debt forever itā€™s essentially as if the money were printed and injected into the economy.

0

nyse125 t1_jdkziwq wrote

Clearly you still haven't grasped BTFP if you still beleive it's QE. Then how come stocks arent greeen 24/7? Also they dont roll over the debt forever with this, we dont know what they'll do a year from now.

1

TSLA240c t1_jdl73z2 wrote

It is QE, just go and Google QE so we can put this to bed.

Stocks have been relatively green over the past week. Given how much catastrophically terrible news weā€™ve received it shows something ainā€™t kosher in the system.

Yes these arenā€™t supposed to roll over but we see time and time again the second the Fed goes to unwind itā€™s balance sheet something in the economy breaks and they reverse course, exactly like what weā€™re seeing once again with BTFP.

1