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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

#81

Post by MuffinFlavored »

almost_usual wrote: post #6
Findeton wrote: post #3

This 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.

when do you think the Fed will pause/are rate cuts already being priced in a 12 month horizon?

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#82

Post by lumost »

Findeton wrote: post #3

This 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.

The fed is in between a rock and a hard place. Once upon a time, asset prices were low relative to incomes - and assets people cared about day to day like housing generally weren’t terribly competitive.

The fed started rate targeting, and asset prices started rising as the economy adapted to Fed policies. 50 years later assets like homes regularly exceed individuals lifetime earning potential.

If interest rates rise, these asset prices must fall. If they fall, then someone is on the hook as a counter party. The fed bailing out the banks with more free money kicks the can down the road.

Best case scenario is a steady inflation that raises incomes closer to assets. However this inflation effects boomers, millennials, and gen z differently- there is no easy solution.

But swinging between 0 interest rates and bailouts won’t help things.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#83

Post by tl_donson »

prasadjoglekar wrote: post #55
fosk wrote: post #45

Earlier quoted context omitted.

As long as the regular Joe doesn’t get extra money to spend, inflation will be check. Banks won’t go buy eggs anytime soon. We had close to 0% interest rates for almost a decade, and inflation was in check. It’s not the Fed that caused inflation, it is: * Suspending school debt (extra income) * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses) * Supply chain bottlenecks after Co…

Inflation was there all along in asset prices - why else have home values gone up disproportionately relative to average Joe's income? What the Fed is doing with this move is patching the balloon and preventing a deflation. That is, bank has a run on deposits because people want their money back; bank is out of liquid cash; bank sells bonds/MBS that have mark-to-market less than par thus realizing losses. The downstr…

who leases a lambo

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#84

Post by iforgetti »

HDThoreaun wrote: post #57
fuoqi wrote: post #48

Is there anything preventing banks from buying treasures on open market by using funds they got from Fed by exchanging their treasuries on mark-to-maturity basis? Looks like a bailout with extra steps.

The interest rate on the loans is .1% higher than the 3 month T bills which is all they can get before the loan comes due. They would lose money with this strategy.

But if they are using bonds which the fed has valued at face value rather than market value as collateral then this is still effectively free money.

They are only losing .1% of bond value instead of the difference between face and market value.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#85

Post by jbverschoor »

almost_usual wrote: post #6
Findeton wrote: post #3

This 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.

Bs.. you might be confused with the 0% reserve requirements.

QE its strings attached, and this is also QE. They are buying debt from the banks (by giving out a loan)

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#86

Post by Retric »

jbverschoor wrote: post #85
almost_usual wrote: post #6

Earlier quoted context omitted.

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.

Bs.. you might be confused with the 0% reserve requirements. QE its strings attached, and this is also QE. They are buying debt from the banks (by giving out a loan)

They are lending on collateral not buying anything.

QE is actually buying assets. https://en.wikipedia.org/wiki/Quantitative_easing

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#87

Post by antibasilisk »

almost_usual wrote: post #6
Findeton wrote: post #3

This 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 a loan, not QE

QE is literally just funky loans.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#88

Post by lumost »

fosk wrote: post #64
rqtwteye wrote: post #52

Earlier quoted context omitted.

I don’t really understand the inflation situation. When house prices shot up, heath care costs shot up, education costs shot up there was no inflation. But when the little guys got some money, suddenly we call it inflation. I don’t really get it.

When you give to 300+ million people extra cash to spend, you have inflation, yes. I am not arguing that “before” it was better for the “little guys”, I am just making an observation. You can affect the economy with fiscal policy (what our politicians/government does) and monetary policy (the central bank). Turns out monetary policy didn’t cause inflation to rise as much, as the previous 13 years demonstrate, but it…

This is severely dismissing the economic distortion of monetary stimulus. We’ve effectively been printing money into wealthy individuals assets. Increasing wealth inequality has tangible negative effects on the economy and effectively functions as a reverse tax.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#89

Post by MuffinFlavored »

matheusmoreira wrote: post #60
almost_usual wrote: post #6

Earlier quoted context omitted.

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.

There may be strings attached but it's still a massive loan that inflates the money supply.

What would the alternative have been? Don't lend it/provide it for banks and let ________ play out instead where _______ is defined as ________.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#90

Post by antibasilisk »

tick_tock_tick wrote: post #16
Findeton wrote: post #3

This 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.

Inflation doesn't come from QE it comes from very tight labor markets and monetary policy putting money in the hands of the poorest members of society.

that's like saying getting sick doesn't come from pathogens it comes from your immune response
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