Yesterday, the Fed said it would restart bond purchases in the open market. In addition, it will continue to conduct overnight financing operations until January next year.
For the Fed, injecting cash into the market is already routine. Policymakers appear to be trying to convince the public that there is nothing wrong with their easing measures. But what we get is cheap money that depreciates at a faster rate.
Last month, the M2 money supply crossed the $15 trillion mark.
Elsewhere, the M1 money supply is referred to as money in a narrow sense, and the most liquid money that includes it is about to hit the $4 trillion mark.
For former Congressman Ron Paul, the Feds intervention in the market is a form of monetary socialism because the central bank is trying to stabilize the value of the currency by manipulating it, rather than letting the market determine its value .
On Friday, the Federal Reserve announced that it would begin buying at least $60 billion in U.S. Treasuries a month through at least the second quarter of 2020. In addition, it will extend repurchase operations from the end of November to at least the end of January next year. The Fed explained that these actions are purely technical measures designed to support the effective implementation of FOMC monetary policy and do not represent a change in the stance of monetary policy.
The Fed is trying to convince the public that we shouldnt call its measures quantitative easing, and its final steps arent even part of monetary policy. For central banks, bond purchases and cash injections into the repo market are necessary to protect the economy and mitigate potential risks, especially during the U.S.-China trade war.
Its not about creating more demand or creating more stimulus, its not going to have any impact on monetary policy because its not designed that way, Dallas Fed President Robert Kaplan told the media.
However, economists believe that this is the purest form of quantitative easing and should be treated as such. Usually, quantitative easing is the result of a crisis, but the Fed does not seem to want the public to realize that there is a problem with the economy.
However, the numbers are insane, with the New York Fed adding $88.1 billion through the repo market on Thursday and another $82.7 billion on Friday.
The original text comes from bitcoinist, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the editor for Chinese reprint.
The original text comes from bitcoinist, compiled by the BluemountainLabs team, the English copyright belongs to the original author, please contact the editor for Chinese reprint.
