Federal Reserve lent $300B in emergency funds to banks in the past week
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Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#2Why are we even doing the dance that banks need to keep short term assets on hand to satisfy deposit outflow? Can't they just buy whatever government bonds they want (if the federal government defaults and does not honor its debt there are bigger issues than some regional bank) and give them to the Fed in exchange for freshly minted money?
It's the end result in either case, but a lot of uncertainty and friction is added for some reason. Why?
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#3This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#4Why are we even doing the dance that banks need to keep short term assets on hand to satisfy deposit outflow? Can't they just buy whatever government bonds they want (if the federal government defaults and does not honor its debt there are bigger issues than some regional bank) and give them to the Fed in exchange for freshly minted money? It's the end result in either case, but a lot of uncertainty and friction is a…
Banks lend money to the US government so that a different branch of government can loan the money again to the banks?
The whole thing sounds like a charade
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#5Id be curious to know how much physical currency has been withdrawn and if there are pressures on that. Inter-bank deposits are covered for people fleeing bad banks, but anecdotally I know a few people who are withdrawing all their hard cash. I wonder if central banks will have issues with that soon.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#6This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
It’s a loan, not QE. QE is no strings attached money injected into the market.
QT is still ongoing as of last week, however, I don’t see it lasting.
I do think a .25 rate hike will still happen.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#7I assume banks went ahead and bought subprime mortgage bonds with that $300B. And at this point why not? Everyone knows that the government will print an unlimited amount of money to keep the system going no matter what risks you take and how careless you are.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#8This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
It's not strictly QE, but it is increasing the money supply. Lending is money creation; repayments are money deletion.
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#9This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.
0% loan, really
Re: Federal Reserve lent $300B in emergency funds to banks in the past week
#10This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.
QE has no impact on inflation because loan origination is not reserve constrained, because banks can always use their government securities as collateral