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In other words "it's all done with mirrors" or a bit like the...

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16/11/19

06:33

Post #: 41459281
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Originally posted by Crom Valen ↑

Weird it does not mention that reserves raised from QE are sent to commercial bank vaults and never enter the market except for clearing and checking purposes

So you think that is happening when the Fed buys US Treasuries?

How the Fed Monetizes the Debt

When the U.S. government auctions Treasuries, it's borrowing from all Treasury buyers, including individuals, corporations, and foreign governments. When the Fed purchases these Treasuries, it doesn't have to print money to do so; it issues a credit to its member banks that hold the Treasuries, and then it puts them on its own balance sheet. The Fed turns the debt into money by removing those Treasuries from circulation.
This process may make it seem as if the Treasuries bought by the Fed don't exist, but they do exist on the Fed's balance sheet, and technically, the Treasury must pay the Fed back one day. Until then, the Fed has given the federal government more money to spend, increasing the money supply, and monetizing the debt.

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In other words "it's all done with mirrors" or a bit like the old "three shell game"
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0 Great analysis

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