Posted on 07/01/2021 5:06:50 AM PDT by The Houston Courant
In June, the Federal Reserve disclosed its balance sheet to have passed $8 trillion in assets for the first time in its 108-year history. The holdings illuminate the increasing role the central bank is playing the economy as the United States weathered the 2008 financial crisis and COVID-19. As the economy continues to show signs of strength the Federal Reserve signaled that a reversal in loose monetary policy may be ahead.
In a hearing with the U.S. House select subcommittee on COVID-19, Federal Reserve Chairman Powell expressed that the U.S. economy is on the rise with increased hiring and spending. “The housing sector is strong and business investment is increasing at a solid pace,” Powell said to the committee.
Though he painted an optimistic picture, Powell did temper his comments with an acknowledgement of elevated inflation. “Inflation has increased notably in recent months,” adding further he expects these to be temporary as supplies of goods return to normal levels. “We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances.”
In early June, the Fed announced via press release a winding down of its portfolio of temporary COVID-19 corporate credit facilities, among the first of indications that changes are ahead.
(Excerpt) Read more at houstoncourant.com ...
Trump added 4.8 trillion in 4 years but that included 2 trillion for the stimulus package.
The difference is...We got something for our money. Taxes were restructured. The military benefited. The border was finally being brought under control. Millions got checks for $1,400 to help with the devastation of the shutdowns by the governors.
In other words, the deficient was an investment.
“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances.”
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The Federal Reserve is apparently legally blind.
This chart is a year old but shows a lot of foreign countries holding big bucks in US debt:
https://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/
That is normally the case. Except its not.
The Fed is still purchasing MBS at an alarming rate; they are the largest single holder of mortgages in the nation.
Also, the banks are making their Net Interest Margin by placing their reserves at the Fed overnight—so they don’t HAVE to lend.
I understand how the banking system works. The Fed buying mortgage backed securities is not “normal.”
8 trillion in “assets” = 8 trillion dollars of US government bonds.
He’s not one of us, that’s for sure.
And the debt is supposedly $26t. In the business world, your BANKRUPT.
“This chart is a year old but shows a lot of foreign countries holding big bucks in US debt:”
About half the debt is still held by foreign and domestic investors. The other half is owed to the government itself.
But if those foreigners decide they no longer want US debt at 1% interest rates, the gov’t doesn’t need to raise rates. They have the out of simply selling to themselves at 1% interest.
It’s a big change in the last 10 years. Every government in the world has quietly embraced Modern Monetary Theory without any public discussion on what that means.
Bump for later.
The Feds Four Stage excuse (Hat tip to "Yes, Prime Minister")
“””Obama added 6.781 trillion in 8 years to the debt....the highest ever.
Trump added 4.8 trillion in 4 years but that included 2 trillion for the stimulus package.
The difference is...We got something for our money. Taxes were restructured. The military benefited. The border was finally being brought under control. Millions got checks for $1,400 to help with the devastation of the shutdowns by the governors.
In other words, the deficient was an investment.”””
I agree with all of your points and would add-—
Trump also grew the economy. When we have full employment and rising ‘real’ wages, that leads to more taxes and lessens the impact of an increase in the debt.
Obama did not grow the economy.
Thanks for the info I think, since if I understand you correctly this is an extremely bad thing, and probably explains why Biden was so eager to fire Trump's FannieMae/FreddyMac guy.
“The holdings illuminate the increasing role the central bank is playing the economy as the United States”
Translation: “We’re having a hard time selling out debt to other people.”
What the Federal Reserve has been doing is buying parking lots at bank for a $1 billion as “holdings”.
Every Fed member bank owns shares. Each bank gets one vote, no matter how many “shares" they own.
In 2020, shareholders received $386 million in dividends.
Guess how much the US Treasury got in 2020......$88.5 billion.
The Fed is paying 0.15%. How much is the Net Interest Margin for US banks?
Risk free? With literally no overhead? Not much more.
If you have a link proving it's near 0.15%, post it.
It means they will continue to pretend they are all solvent (or at least able to pay their debts), otherwise the whole house of cards comes down worldwide. It is a classic Mexican standoff.
I have ten years as a senior executive in a bank.
Do you? Look it up. I am not here to do your research. This isn’t high school.
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