{"id":50633,"date":"2020-01-20T18:31:57","date_gmt":"2020-01-20T23:31:57","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50633"},"modified":"2020-01-20T18:32:02","modified_gmt":"2020-01-20T23:32:02","slug":"opinion-the-federal-reserve-is-stuck-in-quantitative-easing-hell","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50633","title":{"rendered":"Opinion: The Federal Reserve is stuck in quantitative-easing hell"},"content":{"rendered":"\n

Opinion:\u00a0The Federal Reserve is stuck in quantitative-easing hell<\/a><\/h3>\n\n\n\n

The central bank\u2019s short-term buying of securities could morph into long-term easing<\/strong><\/p>\n\n\n\n

\"\"\/
Federal Reserve Chairman Jerome Powell<\/figcaption><\/figure>\n\n\n\n

Imagine doing the same thing over and over again, with little progress and no relief. Sounds like most people\u2019s vision of hell \u2014 or the Federal Reserve\u2019s current predicament. <\/p>\n\n\n\n

Since September, the central bank, through the Federal Reserve Bank of New York, has been purchasing securities hand over fist to alleviate short-term pressures in the overnight money markets. It has used repurchase (\u201crepo\u201d) and reverse repurchase (\u201creverse repo\u201d) agreements to provide liquidity and keep overnight borrowing rates from spiking. <\/p>\n\n\n\n

But these complex money market operations already have caused the Fed to buy a net $400 billion worth of securities, after Chairman Jerome Powell shrank the Fed\u2019s balance sheet by $700 billion. That \u201cnormalization,\u201d which also included raising the federal funds rate through late 2018, is now effectively dead and the Fed\u2019s balance sheet is growing again.<\/p>\n\n\n\n

Powell and the Fed have repeatedly denied<\/a> this is a new phase of \u201cquantitative easing (QE),\u201d<\/a> three rounds of which added $3.6 trillion to the Fed\u2019s balance sheet in the years after the financial crisis. And indeed, in the earlier rounds of QE, the central bank bought Treasuries and mortgage-backed securities of various maturities. The current buying has been focused on Treasuries with maturities of 12 months or less. <\/p>\n\n\n\n

On the way: QE4<\/h6>\n\n\n\n

But that may not continue, says\u00a0Danielle DiMartino Booth<\/a>, CEO and chief strategist at Quill Intelligence, a Dallas-based boutique research firm. Booth, who worked on both Wall Street and in the Federal Reserve Bank of Dallas, has been a critic of Fed policies since the central bank pushed fed funds down to near zero and launched its three rounds of QE after the financial crisis. (She also was one of the few people to connect the dots between the housing bust and Wall Street before the crisis hit.)<\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

Opinion:\u00a0The Federal Reserve is stuck in quantitative-easing hell The central bank\u2019s short-term buying of securities could morph into long-term easing Imagine doing the same thing over and over again, with little progress and no relief. Sounds like most people\u2019s vision of hell \u2014 or the Federal Reserve\u2019s current predicament.  Since September, the central bank, through […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[303,28841,16888,5220,27345,662,3650],"class_list":["post-50633","post","type-post","status-publish","format-standard","hentry","category-economics","tag-fed","tag-howard-gold","tag-jerome-powell","tag-marketwatch","tag-notqe","tag-quantitative-easing","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50633","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50633"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50633\/revisions"}],"predecessor-version":[{"id":50634,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50633\/revisions\/50634"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50633"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50633"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50633"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}