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Thread: The US Federal Reserve

  1. #41

    Default Whenever you need a good laugh

    Interesting last name BRAINard. Must have taken a lot of grey matter to reach this conclusion.
    Be interesting how far they stick to their diet this time before they cannot take it.

    April 5 (Reuters) - Federal Reserve Governor Lael Brainard on Tuesday said she expects methodical interest rate increases and rapid reductions to the Fed's balance sheet to bring U.S. monetary policy to a "more neutral position" later this year, with further tightening to follow as needed.

    "I think we can all absolutely agree inflation is too high and bringing inflation down is of paramount importance," Brainard said at a conference at the Minneapolis Fed.

    To do so, she said, the Fed will raise rates "methodically" and as soon as next month begin to quickly ramp up reductions to its nearly $9 trillion balance sheet to a "considerably" more rapid pace of runoff than the last time the Fed shrank its holdings.

    The rapid portfolio reductions "will contribute to monetary policy tightening over and above the expected increases in the policy rate reflected in market pricing and the Committee’s Summary of Economic Projections," she said.

    Brainard's remarks, her first since the Fed last month raised rates for the first time in three years, sent stocks down and Treasury yields up to multi-year highs as investors digested the hawkish tone from one of the Fed's usually more dovish policymakers.

    Investors are concerned by "the speed and aggressiveness of the Fed with its balance sheet reductions," said CFRA Research's Sam Stovall.

    Fed projections released after the March meeting showed most policymakers thought the policy rate would end the year at least in the range of 1.75%-2%, if not higher, a pace that would require quarter-point rate increases at all six remaining Fed meeting this year.

    Markets see the Fed moving faster, delivering half-point rate hikes in May, June and July, to bring the rate to 2.5%-2.75% by the end of this year. That would be above the 2.4% level that most Fed policymakers view as "neutral."

  2. #42

    This chart shows the Fed's purchasing of Mortgage Backed Securities. It looks to have started around 2008ish. It now stands at nearly $3T. Considering a population of roughly 300M, that would seem to indicate that the Fed printed & spent roughly $10k on MBS for each man, woman & child in the US. The first question to enter my mind is - how much gas did that blow into the housing bubble? This then leads to the next question, regarding how much the market would drop if that support were removed. There are also questions regarding the wealth transfer that this supports from tax paying non-homeowners to homeowners.

    Policy certainly does have consequences.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  3. #43

    Default Only graph you ever need to look at

    I look at these type of graphs every time I hear to much newspeak from
    the Fed or mainstream financial media.

    Just love how the line for inflation starts its climb just after 1971.
    It would be even steeper if calculation of CPI was not changed soon after to diminish it.
    If I benefited from inflation, I would definitely help propagate the notion that Gold is a barbaric relic.

  4. #44


    The FED is an evil institution, and I wish it to go down in infamy. Doubt I will see that happen soon, though it would be grand. Rooting for hyperinflation, even if it means my own life of relative comfort comes to an end. Burn baby burn....
    “Of all the contrivances for cheating the laboring class of mankind, none has been more effective than that which deludes them with paper money.”Daniel Webster (1782-1852)

  5. #45

    Default Balance sheet Runoff seems slow.

    The caps were raised this month but the actuals don't seem very close to the published runoff rate projections.....looking at the FRED St Louis Fed net balance sheet. Also, reverse repos spiked on the BOE stuff and came back to slightly higher than a few months ago. 2.23T NY FED dashboard


    we'll see about ....????
    Last edited by ruthenium; 10-06-2022 at 03:46 AM.

  6. #46


    Yee- Ha Show me where the trough is.

    The Fed is paying out 4.3% to banks and MMF`s etc on its reverse repo facility.
    This facility has hardly been used up until the last 2 years. It is at 2.5 trillion ( yes trillion) currently. Guess that is where a lot of that free money from Covid went.

    Yee- Ha no risk, perfect liquidity and a 4.3% rate. Who pays - the taxpayer of course. Got to love Capitalism ( sarcasm) at work. Quote from Atlantic Council 01/09/23 article below. Note the Treasury has already lost this income from the Fed and will for quite a while, perhaps a very long while, as the losses must be recouped before any payments are made, assuming rates go down significantly.

    Moreover, the Fed has generated net earnings, mainly from interest income on its holdings of government and other securities as well as on its lending to banks. This has allowed it to transfer about $1 trillion to the Treasury department cumulatively since 2010, reaching a record annual payment of $109 billion in 2021. However, as the Fed has begun to reduce its holdings of government securities through QT and pays interest in ON RRP transactions and on bank reserves at the Fed, it is estimated to post a loss of $80 billion by the end of 2022. In other words, the US government stands to lose a stable and painless source of revenue from the Fed when such an income can be useful given many urgent needs for government spending.

    The way the Fed implements its monetary policy decisions has incentivized MMFs to deal with the Fed at the expense of other private entities. By guiding the effective Fed funds rate within targeted ranges and implanting other prudential regulations, especially the Supplementary Liquidity Ratio for banks, it has led the US economy to rely on the Fed for its normal operations as a money market maker of first resort, rather than a traditional lender of last resort during financial crises. This development could, over time, undermine the efficiency and robustness of the market economy the United States claims to have.

  7. #47


    I suppose I won't be taking the thread off topic by posting the following. The above post by brutus2 caused me to be curious about aspects of the FEDs profits etc. and I wondered if the FED pays income tax. Pay attention to the part of the answer that states "...the Federal Reserve is not considered a government agency...". The reason will be obvious in the paragraph that follows.

    Does the federal reserve pay taxes on profits?

    "The Federal Reserve is exempt from paying federal income taxes on its profits. This exemption is based on the Federal Reserve Act, which states that the Federal Reserve is not considered a government agency for tax purposes. However, the Federal Reserve does pay some taxes, such as property taxes on buildings it owns and state and local taxes on income from its non-monetary activities."

    Hmm, ok not considered a government agency. So, what about this...

    Do government agencies pay federal income taxes on profits?

    "No, most government agencies do not pay federal income taxes on their profits because they are considered to be part of the government and are exempt from taxation. This includes federal, state, and local government agencies."

    Sounds like a government agency had a hand in creating those answers.

  8. #48


    Regulators asleep at the wheel?

    If George Carlin was still alive, he would probably have a field day with that question.
    “The Federal Reserve is not currently forecasting a recession.”
    Fed Chairman Ben Bernanke, January 2008
    This is no longer posted in the Fed Minutes of January 2008, but still quoted here - The FOMC minutes still quote MR. Reifschneider. as stating the same thing.

  9. #49


    Quote Originally Posted by SilverPalm View Post

    Regulators asleep at the wheel?

    If George Carlin was still alive, he would probably have a field day with that question.
    Love George.

    Of course they were asleep at the wheel. Did they not admit this bank was a systemic risk.

    What do they do with all those people employed by the regulators.

    When you see hedges disappear that are in place to protect against the very thing that is happening ( increasing rates)
    then you are in a coma. ( No chief Risk Officer?)

  10. #50


    Heresy Financial always has a good take on things in easy explained takes.

    Here he talks about " It`s one big (bailout) club and you`re not in it"

    Near end he states what I believe. The action that the CB`s take are to suppress workers not bankers.

    I continually hear that credit is being tightened etc, but all I ever see is record after record for household debt, corporate debt and government debt.

    I also note that my National Credit Gauge continues to read looser than normal credit conditions.

    I would think the Fed is getting pretty worried about credit in aggregate not contracting with this type of rate increase in past 12 months.

    Cracks are starting to form on the banking infrastructure they have built in past 35 years and they know it needs to work soon or it could get real bad.

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