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Tue Oct 8, 2019, 06:01 PM

Fed Chair Powell says central bank will buy more Treasury bonds soon, but this is 'not QE'

Source: Washington Post

Federal Reserve Chair Jerome H. Powell said Tuesday the central bank will begin buying more Treasury bonds “soon" in order to keep the plumbing of the U.S. financial system running smoothly. “My colleagues and I will soon announce measures to add to the supply of reserves over time,” Powell said at the National Association of Business Economics meeting in Denver, Colorado. “This is not QE."

President Trump wants the Fed boost the economy ahead of the 2020 election with lower interest rates and big purchases of Treasury bonds, an action known as “quantitative easing," or QE. He has pressed Powell and the Fed to make these changes for months, but Powell has long insisted that he will not change course based on political pressure. The Fed chair did not specify the exact size of the new asset purchase program, but he said it would not be a resurrection of what they did after the recession 10 years ago. “I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis,” Powell said.

In an effort to pump more money into the financial system, the Fed went from holding less than $1 trillion in assets in 2007 to $4.5 trillion in 2015. The Fed has gradually trimmed its holdings back under $4 trillion as the economy has improved, but that action has shrunk the level of reserves available to banks. There was alarm on Wall Street last month when there did not appear to be enough reserves in the system and the overnight borrowing rates that banks use to ensure they have enough capital on hand spiked to levels not seen since the financial crisis.

The Federal Reserve Bank of New York took swift action to pump additional reserves into the system for several days, but many analysts said the Fed needed a more permanent fix. Powell’s announcement Tuesday was a widely anticipated move that is meant to prevent a repeat of what occurred in September. The final details should be announced at the Fed’s next meeting and press conference on October 30.

Read more: https://www.washingtonpost.com/business/2019/10/08/fed-chair-powell-says-central-bank-will-buy-more-treasury-bonds-soon-this-is-not-qe/

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Reply Fed Chair Powell says central bank will buy more Treasury bonds soon, but this is 'not QE' (Original post)
BumRushDaShow Tuesday OP
Wellstone ruled Tuesday #1
yaesu Tuesday #2
CountAllVotes Tuesday #3
BumRushDaShow Tuesday #4
CountAllVotes Tuesday #6
BumRushDaShow Tuesday #7
CountAllVotes Tuesday #9
BumRushDaShow Tuesday #11
Owl Tuesday #8
CountAllVotes Tuesday #10
Owl Tuesday #13
not fooled Tuesday #5
IronLionZion Tuesday #12
JohnnyRingo Tuesday #14
roamer65 Tuesday #15
enid602 Tuesday #16
roamer65 Tuesday #18
Hotler Tuesday #17
roamer65 Tuesday #19
roamer65 Tuesday #20
CountAllVotes Wednesday #22
bucolic_frolic Tuesday #21

Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 06:22 PM

1. So Mr.Powell,what do you call it,

a Bond Drive? Sad to say,Powell is in a now win situation. The Banks are going to write bonds up the wazoo.

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 06:27 PM

2. oh, yes it is, and bad is good and good is bad. nt

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 06:28 PM

3. "This is not QE."

uh huh ..............




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Response to CountAllVotes (Reply #3)

Tue Oct 8, 2019, 06:29 PM

4. ...

EXACTLY my first thoughts when I read that!

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Response to BumRushDaShow (Reply #4)

Tue Oct 8, 2019, 06:42 PM

6. Why does Powell even say that?

Just by saying that it makes many say just what we both just thought!

Liar IMO!



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Response to CountAllVotes (Reply #6)

Tue Oct 8, 2019, 06:45 PM

7. That statement might have been for

the benefit of the WH and their talking points, whereas everyone else knows what that code talk means!

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Response to BumRushDaShow (Reply #7)

Tue Oct 8, 2019, 06:50 PM

9. Time to crank up the presses

and print.

As you print the dollar loses value.

Massive deficits do that every time.

Thanks for nothing to the party!



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Response to CountAllVotes (Reply #9)

Tue Oct 8, 2019, 06:58 PM

11. What is exasperating this too is the tradewar.



We might not see the immediate effect of that now due to supplies affected goods having been front-loaded in anticipation. But by next year, there will probably be a reduction in supply due to the higher wholesale cost and then a slow down in purchases of that reduced supply at the retail level, again due to that higher cost and....

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Response to CountAllVotes (Reply #3)

Tue Oct 8, 2019, 06:45 PM

8. What is QE?

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Response to Owl (Reply #8)

Tue Oct 8, 2019, 06:52 PM

10. standard expansionary monetary policy has become ineffective.

Quantitative easing (QE), also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy.[1] An unconventional form of monetary policy, it is usually used when inflation is very low or negative, and standard expansionary monetary policy has become ineffective.

https://en.wikipedia.org/wiki/Quantitative_easing

standard expansionary monetary policy has become ineffective = nothing else left to do except dig the economy into a deeper hole

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Response to CountAllVotes (Reply #10)

Tue Oct 8, 2019, 07:45 PM

13. Thank you. Deeper hole indeed.

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 06:38 PM

5. So...

if these financial machinations succeed in holding off the inevitable recession until after red don scams his way into another 4 year term, there is gonna be a crash during his 2nd term.

I guess as long as pukes maintain control for that 2nd term, enabling them to finish off Social Security and Medicare, complete packing the courts, and wreck the Federal government beyond redemption, they really don't care if the economy tanks then?

Besides, it's not like such immolation will hinder the chance of another puke getting into the White House soon thereafter. A mere 8 years after chimpy's disastrous reign--which should have ensured another puke didn't get within stealing distance of the presidency for at least a generation--an even worse incompetent buffoon scams his way in, with considerable enthusiastic support.






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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 07:15 PM

12. Nothing says a strong winning economy

like lots more stimulus

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 08:04 PM

14. As a retiree, inflation is my worst enemy.

This will free up more $100 bills into the economy ahead of the election, but that means they'll be worth less and less. Recessions come and go, but inflation sticks around forever.

2021 will probably be the year I begin eating alternative food.

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 08:55 PM

15. This is worse than standard QE.

In standard QE, monetizing controlled amounts of existing paper can be a good tool in fighting recession.

In this case, monetization of uncontrolled deficit spending is a recipe for hyperinflation.

Ask Argentina, Brazil or Zimbabwe.

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Response to roamer65 (Reply #15)

Tue Oct 8, 2019, 08:59 PM

16. printing money

It's printing money, plain and simple. No one else will buy the bonds. The dollar's toast.

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Response to enid602 (Reply #16)

Tue Oct 8, 2019, 09:14 PM

18. That's why the overnight capital markets are having liquidity problems.

There is not enuff existing capital to soak up all of this excess Treasury paper.

The market dries up and it takes a higher interest rate to get more liquidity to come into it.

This fiscal crisis is morphing into a currency crisis.

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 09:01 PM

17. Will there be any money left for the Plunge protection Team (PPT)?

what if the PPT struggles to hold the DOW from going past 600-700? Can the Fed buy enough treasuries to stop the hemorrhage?

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Response to Hotler (Reply #17)

Tue Oct 8, 2019, 09:16 PM

19. There is an unlimited amount of money in a fiat currency system.

It boils down to what inflation rate you want to tolerate.

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 09:25 PM

20. Analyst on Bloomberg.

Fed needs to monetize about $200 to 250B of Treasury paper right now to maintain stability in capital markets.

That’s 1/4th of the deficit, folks.

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Response to roamer65 (Reply #20)

Wed Oct 9, 2019, 12:18 AM

22. The tax breaks for the rich have got to go

These tax breaks for the rich are despicable!

The rich will take down the whole of America to pave their greed entrenched path in life. They NEVER have enough, NEVER!!

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Response to BumRushDaShow (Original post)

Tue Oct 8, 2019, 09:36 PM

21. QF

Quantitative Flatulence. Same thing as QE, despite denials.

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