(https://twitter.com/wbmosler/status/1180200546482950150)
Due to term loans and overnight repo cycling, the Federal Reserve balance sheet is up $175B in 3 weeks.
QE4 is here…
Yep, now that they are stacking term loans through October, it’s becoming pseudo-QE4. Balance sheet will keep going up and then at some point they’ll call it organic balance sheet expansion or something, and make it permanent.
Warren B. Mosler #MMT@wbmosler
eta
Purely ‘technical’ to manage the policy rate under current institutional structure- no ‘macro economic’ consequences
2019 urr. 4
(…)
Repo would demonstrably be much higher sans Fed repo program, which would have severe macro consequences before long
oooooooooooooo
(https://twitter.com/wbmosler/status/1180525568263102466)
Fed extending temporary repo program for another 4 weeks. I’m reminded that Nixon also temporarily closed the gold window.
New York Fed@NewYorkFed
We will continue to offer daily overnight repos for an aggregate amount of at least $75 billion each through Monday, Nov 4, 2019. → https://nyfed.org/358HCvN
Warren B. Mosler #MMT@wbmosler
It’s called offsetting operating factors. It’s purely technical. Get over it!!!
“Offsetting operating factors” = “financing US deficits through the banking system/money markets.” Re: “Getting over it”, I’m not angry – this has been baked in the cake for a long time and I’m positioned accordingly.
Warren B. Mosler #MMT@wbmosler
Operating factors are about ‘bank clearing,’ not ‘financing US deficits’, and yes, there are better ways to do it! Details here: https://federalreserve.gov/releases/h41/current/h41.htm
If banks need clearing bc they’re bumping up against liquidity constraints due to UST purchases (that they’re required to make at UST auctions), then what you’re describing are semantics, no?
Warren B. Mosler #MMT@wbmosler
Message me to discuss thanks
2019 urr. 5
oooooooooooooooooo
(https://twitter.com/wbmosler/status/1180804068299722758)
Warren B. Mosler #MMT@wbmosler
It’s called offsetting operating factors. It’s purely technical. Get over it!!!
(…)
Warren B. Mosler #MMT@wbmosler
Operating factors are about ‘bank clearing,’ not ‘financing US deficits’, and yes, there are better ways to do it! Details here: https://federalreserve.gov/releases/h41/current/h41.htm
Sovereign Currency@paythepeople
I respect Warren and have read many papers related to credit creation and “MMT,” but bank clearing also includes “financing” deficits. I understand it is a technical process necessary to meet the federal reserve mandates.
Warren B. Mosler #MMT@wbmosler
eta
Semantics. Bank clearing is about the transfer of funds between banks in a multi bank model. Financing deficits refers to Treasury activities which can take place even in a single bank model.
2019 urr. 6