That's just standard open market operations - ie overnight repo's. It's probably being done to try and avoid the dis-inflationary impact that would otherwise occur if the fed kept the coupon payments as cash instead of using it as a "source" of money for normal operations (ie instead of printing new money as would otherwise happen).
Don't talk rubbish. The size of the Fed's balance sheet has barely changed since QE 'ended'. The Fed uses overnight repos to counter the disastrous effect it's QE programs had on bond market liquidity.
The Fed's goal was to inflate the stock market, because when people's 401ks rise in paper value, they save less and spend more, driving the consumer economy. QE flattened the curve improving the NPV of equities, making them more attractive to investors.
Speak when you are angry and you will make the best speech you will ever regret. Ambrose Bierce
Don't talk rubbish. The size of the Fed's balance sheet has barely changed since QE 'ended'. The Fed uses overnight repos to counter the disastrous effect it's QE programs had on bond market liquidity.
I wouldn't expect to see the Fed's balance sheet shrink significantly for quite some time. And your second statement there is a true example of rubbish - overnight repo's have ALWAYS been the actual mechanism used by the Fed and other CBs in their "standard" interest rate targeting open market ops. QE has nothing to do with it.
Quote:
The Fed's goal was to inflate the stock market, because when people's 401ks rise in paper value, they save less and spend more, driving the consumer economy. QE flattened the curve improving the NPV of equities, making them more attractive to investors.
That may well have been a goal, or an effect of QE, sure. But you could say the same thing about any monetary policy action that has the goal of lowering the interest rate curve, including "standard" overnight rate setting. So nothing special to see there really IMO?
Well duh! What causes carry trade? Oh yea it's INTEREST RATE DIFFERENTIAL!!! And yet the RBA didn't adjust our rates to reduce the differential, reduce the amount of carry trade, and raise the value of the $ etc.... weird hey??? Maybe the RBA sets our rates and not the US? Thanks for proving the exact point I was making.
The point that the RBA or any other central bank adjusts rates is moot. Without higher interest rates, the manner in which the economy functions would be toast. Same as NZ.
Jimbo
20 Nov 2016, 03:50 PM
If BB told me that the tooth fairy came into my room at 2am and put a dollar under my pillow. I wouldn't believe him.
Because it isn't true (unless you are a small child or a simpleton).
BB saying the same thing 100 times with links to websites doesn't make it true either.
From the man whose comedy styling's include "Is Today Doomsday"
What constitutes doomsday for you may not be doomsday for everybody else.
In a free energy world with fully automated production of food and and goods, there won't be much need for profit and money.
Your days of lording it up over a bowl of rice a day Asian waiter will be over.
Doomsday for knobheads like you, a new dawn for Jiaoshang the barman in Beijing.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
What constitutes doomsday for you may not be doomsday for everybody else.
In a free energy world with fully automated production of food and and goods, there won't be much need for profit and money.
Your days of lording it up over a bowl of rice a day Asian waiter will be over.
Doomsday for knobheads like you, a new dawn for Jiaoshang the barman in Beijing.
Yet again you miss the irony of you claim of being an optimist when you are the second most pessimistic person I have ever encountered
Trollie
20 Nov 2016, 08:38 PM
News flash, you won't live to see it.
If you think Dimshits claim through from beginning to end, you will quickly realise nobody will ever live to see it.
Just to pick one - the proposition that sheep will self shear / wool self export / topmaking mills auto spinning / yarn auto-dyed / fabric auto cut, sewn, packaged and exported all without human intervention without profit.
Fish jumping from the ocean self filleting and cooking themselves a close second.
I wouldn't expect to see the Fed's balance sheet shrink significantly for quite some time.
Exactly. So how did QE 'end'?
Quote:
And your second statement there is a true example of rubbish - overnight repo's have ALWAYS been the actual mechanism used by the Fed and other CBs in their "standard" interest rate targeting open market ops. QE has nothing to do with it.
No, eligible RRP counterparties expanded significantly after QE, traditionally repo operations were almost exclusively primary dealers.
Quote:
That may well have been a goal, or an effect of QE, sure. But you could say the same thing about any monetary policy action that has the goal of lowering the interest rate curve, including "standard" overnight rate setting.
No, you can't. Traditionally the central bank controlled the short end of the curve, and the market determined the long end. You can have very low interest rates at the short end and a very steep curve after that. Because long rates are a function of risk assessment. http://libertystreeteconomics.newyorkfed.org/2014/05/treasury-term-premia-1961-present.html%20 QE essentially broke the risk-discovery mechanism by forcing down long rates (roughly 7 year target, where commercial terms tend to max out, especially for junk).
Quote:
So nothing special to see there really IMO?
I can see how you could form that opinion, but it's not opinion shared by experts in credit markets.
Speak when you are angry and you will make the best speech you will ever regret. Ambrose Bierce
Mate if you're quoting macrobusiness from 2014 it's just an admission that you are totally clueless.
This is the problem when poorly informed people like you read headlines but don't read the story.
HINT - headlines are written by a sub-editor not the author. They are the clickbait you swallowed.
In this story the author made it clear when he said:-
The reason Australian mortgage holders may suffer is not as simple as assuming domestic interest rates will follow US rates. That’s unlikely, at least in the short term, as the Reserve Bank of Australia (RBA) actually may be forced to cut again if the Australian economy slips.
The author clearly understands even if you don't. The RBA sets our rates, not the US Fed. In fact the Fed could raise rates while our RBA lowers them. Until you understand how and why rates are set you understand nothing.
So interest rates always go down, house prices always go up.
Just to pick one - the proposition that sheep will self shear / wool self export / topmaking mills auto spinning / yarn auto-dyed / fabric auto cut, sewn, packaged and exported all without human intervention without profit.
Anything which can be done by a human today will be done by a machine in the future.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
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