US Fed will start buying Treasury bills to manage market liquidity

Post by vdupras » Thu, Dec 11, 2025, 3:59 AM UTC

halJordan wrote: post #10

vdupras wrote: post #2

Does it do this often? This is quite literally "printing money", right? Wasn't the Fed not supposed to be allowed to do that? I'm guessing that if it doesn't do that, short term treasury yields will spike, and they don't want that to happen? Doesn't this make treasury yields meaningless? If they're subsided by the Fed, then it means that nobody but them will buy them, since this subsidy means that short term treasuri…

The absolute least you can do is read the article. It is so frustrating to watch someone cry about being thirsty while water splashes their face

Post by vdupras » Thu, Dec 11, 2025, 4:21 AM UTC

dragonwriter wrote: post #12

vdupras wrote: post #2

Does it do this often? This is quite literally "printing money", right? Wasn't the Fed not supposed to be allowed to do that? I'm guessing that if it doesn't do that, short term treasury yields will spike, and they don't want that to happen? Doesn't this make treasury yields meaningless? If they're subsided by the Fed, then it means that nobody but them will buy them, since this subsidy means that short term treasuri…

> This is quite literally "printing money", right? No, its not literally printing money. (That’a what happens in the big presses run by the Bureau of Engraving and Printing.) It is arguably figuratively printing money, but that’s exactly one of the Fed’s primary tools to acheive its job, by design. > Wasn't the Fed not supposed to be allowed to do that? What gave you that idea?

Post by vdupras » Thu, Dec 11, 2025, 4:30 AM UTC

dragonwriter wrote: post #14

vdupras wrote: post #13

Earlier quoted context omitted.

I don't know, general principles. If you can balance your budget with money printed out of thin air, why bother with selling treasury bills to anyone but the Fed, at 0%?

The whole reason for a central bank with its own mission and decisionmaking on monetary policy is to separate that function from budgeting done by the Congress, so that the people controlling the budget cannot balance the budget through monetary policy. Now, if you had evidence of the Fed making decisions on the basis of impact on budget fiscal balance rather than on the basis of balancing the tension in its “dual ma…