Sevexity

This is not QE…

Oct 9, 2019
sevexity

Some more gold from the Americans: This is Fed Chairman Jerome Powell telling us that buying treasury bills isn’t QE because they’re buying short-dated assets and not long-dated assets.

An excerpt from the article:

Mr. Powell emphasized that the coming moves are aimed at maintaining a firm grip on very-short-term lending rates—and not to provide economic stimulus, as the Fed did between 2008 and 2014 by purchasing longer-dated Treasury and mortgage securities in successive campaigns sometimes referred to as quantitative easing, or QE.

“This is not QE,” Mr. Powell said. “In no sense is this QE.“

Rather than purchase longer-dated securities, Mr. Powell said officials are now contemplating buying shorter-dated Treasury bills. Officials believe holding long-term securities boosts the economy and financial markets by lowering long-term rates and driving investors into stocks and bonds. They think a portfolio weighted toward shorter-term securities provides less or no stimulus.

If you don’t know what all of this is in reference to, this article by Ben Hunt will help explain it.

In some ways I agree with Mr. Powell. This isn’t the Fed trying to stimulate economic growth. This is the Fed trying to keep the system from completely falling over. Once you make a system as fragile as our economic system (I say ‘our’ system because Globalism), things like these tend to happen. And will probably keep happening until all the band aids we have put on turns out to have been fuel added to the proverbial fire.

In other ways I completely disagree with Mr. Powell to the point that I actually want to tell him to go fuck himself. Please don’t lie to us based on some sort of technicality. Is the Fed balance sheet growing again? Yes. Is the Fed providing liquidity to the market again? Yes. This is Quantitative Easing? Yes. Is the Fed losing all credibility? Yes.

But this little slip in the economic machine isn’t the place where it all falls apart. There are too many eyes covering this one. This is just another hole in the dyke. But at some point the Fed is going to run out of fingers.

Is this good for bitcoin? Yes

Comments