Posted on 04/06/2022 12:03:49 PM PDT by ChicagoConservative27
Federal Reserve officials agreed to shrink the central bank’s balance sheet by a maximum of $95 billion each month, minutes from the March meeting of the Federal Open Market Committee revealed on Wednesday.
Fed officials in March hiked the target for overnight lending and the interest paid on reserves by a quarter of a percentage point, to a range of 0.25 to 0.5 percent. The minutes released Wednesday revealed previously undisclosed details about the Fed’s plans to shrink its enormous stockpile of bond holdings.
(Excerpt) Read more at breitbart.com ...
Actually doing it will be a problem.......................
How do they intend to shrink it? Who will want to buy those bonds?
They’re going to wave a magic wand.
That’s the idea of the financial markets - at the right price, you can sell any stock or bond.
At $95bil per month, I believe that puts us at an approximately 24 month sale.
About $2trillion pulled out of the economy over two years.
It will have an impact and start the process of cool down.
President Trump has a magic wand, perhaps he will lend it to them.
” Who will want to buy those bonds?”
It’s a fire sale.
And it’s in competition with the US Treasury sales for US treasuries.
But much of the balance sheet is Mortgage backed Securities and other such bundled instruments.
In every sector they make a sale, they will be competing against somebody for capital.
A money sponge.
I don’t think they have the guts to go through with it.
They are not selling them. They are removing them from existence.
It’s the same as if the fed took $2 trillion in dollar bills and burned them. The hope is that will make every other bill worth more.
While true for US Treasuries, I don’t see how the can simply disappear CDOs and MBSs.
There are downstream repercussions.
“I don’t see how the can simply disappear CDOs and MBSs.”
Easy they wait. They don’t have any plans to sell them. The plan is to wait for securities to expire and not buy new ones.
$1 trillion per year. $9 trillion on the books. Recession hits within 2 years, so they will stop selling with $7 trillion still on the books, and back up we go!
No. They are actually selling bonds.
It’s the same as if the fed took $2 trillion in dollar bills and burned them.
Exactly. That's the plan.
The hope is that will make every other bill worth more.
They were created in the last few years and made every other bill worth less.
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