Peter - your para here: The Fed had only recently began actively shrinking the money supply—a process which has now been well and truly aborted with the tremendous spike in Federal Reserve loans to member banks in response to the recent liquidity fears. I have read elsewhere is not easing (or stopping the tightening), and/or that these l…
The Fed had only recently began actively shrinking the money supply—a process which has now been well and truly aborted with the tremendous spike in Federal Reserve loans to member banks in response to the recent liquidity fears.
I have read elsewhere is not easing (or stopping the tightening), and/or that these loans should not be viewed as allowing the banks to avoid the losses (due to their under-water investments to continue losing value as rates have risen). But I'm not savvy re these topics -- and/or I'm not sure who to trust given their bias to present these consistent with their past predictions or clients. Have you done a deeper dive on these 'loans' and whether they do indeed present a pivot or return to QE (and/or giving the banks a pass on those poor decisions)? Would you please?
Thanks in any event for all you are providing here -- Hoping you have some time to pray, give thanks and reflect on this day of our Lord.
The loans being made are generally very short term, are presumably fully collateralized.
The question will be whether or not these loans end up as permanent additions to the Fed's balance sheet.
If the balance sheet is expanding, the Fed is easing. If the balance sheet is shrinking, the Fed is tightening.
Events right now are far too fluid to be certain what is and is not easing. Certainly the short term loans being made through the discount window and other facilities have the potential to constitute easing, but it would be getting ahead of the data to say one way or another just yet.
Peter - your para here:
The Fed had only recently began actively shrinking the money supply—a process which has now been well and truly aborted with the tremendous spike in Federal Reserve loans to member banks in response to the recent liquidity fears.
I have read elsewhere is not easing (or stopping the tightening), and/or that these loans should not be viewed as allowing the banks to avoid the losses (due to their under-water investments to continue losing value as rates have risen). But I'm not savvy re these topics -- and/or I'm not sure who to trust given their bias to present these consistent with their past predictions or clients. Have you done a deeper dive on these 'loans' and whether they do indeed present a pivot or return to QE (and/or giving the banks a pass on those poor decisions)? Would you please?
Thanks in any event for all you are providing here -- Hoping you have some time to pray, give thanks and reflect on this day of our Lord.
DT
The loans being made are generally very short term, are presumably fully collateralized.
The question will be whether or not these loans end up as permanent additions to the Fed's balance sheet.
If the balance sheet is expanding, the Fed is easing. If the balance sheet is shrinking, the Fed is tightening.
Events right now are far too fluid to be certain what is and is not easing. Certainly the short term loans being made through the discount window and other facilities have the potential to constitute easing, but it would be getting ahead of the data to say one way or another just yet.