The Fed Has Given Up: Get Ready For More QE
(Op-Ed)
The Federal Reserve's Federal Open Market Committee on Wednesday voted unanimously to keep the federal funds rate unchanged. Overall, the FOMC signaled it has made a dovish turn away from the promised normalization of monetary policy which the Fed has promised will be implemented "some day" for a decade. Although the Fed began to slowly raise rates in late 2016 — after nearly a decade of near-zero rates — the target rate never returned to even three percent, and thus remains well below what would have been a more normal rate of the sort seen prior to the 2008 financial crisis.
Much of the Fed's continued reluctance to upset the easy-money apple cart comes from growing concerns over the strength of the economy. Although job growth numbers have been high in recent years — and this has been assumed to be proof of a robust economy — other indicators point toward less strength. Workforce participation numbers, wage growth, net worth numbers, auto-loan delinquencies and other indicators suggest many Americans are in a more precarious position than headlines might suggest.
The Fed's refusal to follow through on raising rates, however, has highlighted this economic weakness, and today's front-page headline in the Wall Street Journal reads: "Growth Fears to Keep Fed on Hold"
Abandoning Plans to Reduce the Balance Sheet
For similar reasons, the Fed has also signaled it won't be doing much about it's enormous balance sheet which ballooned to over four trillion dollars in the wake of the financial crisis. Faced with enormous amounts of unwanted assets such as mortgage-backed securities, the Fed began buying up these assets both to prop up — and bail out — banks and to produce an artificially high price for debt of all sort.
This kept market interest rates low while increasing asset inflation — all of which is great for both Wall Street and for the US government which pays hundreds of billions in interest on federal debt.
At best, "total balance sheet will be around $3.8 trillion, down from $4.5 trillion at its peak." Moreover, "the Fed will soon be a net buyer of Treasurys once again," analysts said, and some estimate "the Fed is on course to be buying $200 billion of net new Treasurys by the second half of 2020."
Put simply: the days of quantitative easing are back, and we're not even in a recession yet.
Some observers might simply respond with "big deal, the economy's growing, and better yet, the Fed has given us both growth and little inflation."
But things are not all as pleasant as they seem.
rest at link
https://www.zerohedge.com/news/2019-03-22/fed-has-given-get-ready-more-qe
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Here are a few things to give you background of how/why they are in this position
This is put out by the FRBNY so consider the source
'''Large-Scale Asset
Purchases by the Federal
Reserve: Did They Work?'''
PDF Link
https://www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gagn.pdf
Federal Reserve Scam Only Worsens the National Debt
http://themillenniumreport.com/2019/02/federal-reserve-scam-only-worsens-the-national-debt/
Troubled Asset Relief Program - TARP
https://www.investopedia.com/terms/t/troubled-asset-relief-program-tarp.asp
The Ugly Truth Behind the Federal Reserve's Quantitative Easing
https://www.theblaze.com/contributions/the-ugly-truth-behind-the-federal-reserves-quantitative-easing
Just go away EB
Agree on the fail aspect
40%? Think that is too conservative because of this-cap. We almost had price discovery on one day in march '09. But that lasted for a few ticks intra-day.
yes. Been a busy pepe with the insider sales. said I would not post them at night or on weekends but if I refrain then would have too many to do at once. Summer may be late. think it starts habbening sooner-see how they close the qtr next friday. The hot potato hand-offs are already taking place for book reporting.