Posted on 12/24/2015 10:30:21 AM PST by Toddsterpatriot
In 2016, the Federal Reserve will pay at least $12.2 billion to U.S. and foreign banks to keep the money created via its quantitative easing programs out of the economy. If the Fed raises rates as expected next year, the amount nearly doubles to $23.1 billion.
From 2008 to 2015, the Fed purchased over $4 trillion worth of bonds to stimulate growth in the economy. Risk markets responded, as is demonstrated by the close correlation between the S&P 500 and growth of the Fed's balance sheet through its bond purchases.
(Excerpt) Read more at finance.yahoo.com ...
If the banks with these $4 trillion in reserves decided to make $4 trillion in new loans, that money ends up as reserves in other banks. And those banks would still get interest on those reserves. Durr.
Never enough! Fed, “Buy our worthless Treasury bills, notes & bonds.”
Never enough! Fed, “Buy our worthless Treasury bills, notes & bonds.”
So they are bailing out the TBTF banks again?
No, the Fed used reserves, now paying 0.50%, to buy bonds paying 2%-4%.
If you buy bonds, you should be taking in income from the sellers, not paying out more money in interest to the bond issuers.
If I’m reading the article correctly the Fed is selling bonds: “the Fed conducts daily auctions to drain cash from the economy”.
The money they are paying out is on Required Reserves and Excess Reserves that banks have on deposit at the Fed.
The Fed is collecting interest on the Treasuries and MBS it holds.
not paying out more money in interest to the bond issuers.
The Fed isn't paying interest out on the bonds they hold.
Well, per the headline, they are paying someone $12 billion.
It didn’t say they were paying the bond issuers.
No, it doesn’t. You introduced that concept in post 5. “the Fed used reserves, now paying 0.50%, to buy bonds paying 2%-4%. “ The story says that the Fed is paying, not getting paid.
So that’s why we don’t have high inflation, they’r keeping the money out of the public.
You mentioned bond issuers, not me. Not the article.
The story says that the Fed is paying, not getting paid.
Yes, the Fed pays on reserves, collects on their bond portfolio. Made about $100 billion last year.
Interest on reserves isn't stopping the banks from lending. Ever higher capital requirements do the trick.
You might try reading your own post 5. You first brought up bonds. No mention of bonds at all in my Post 4, dealing with bailouts of the To Big To Fail banks.
I'm not sure at this point whether you are impaired, whether you are trying to fib your way out of the hole you have dug, or what is going on with you. It's obviously gone beyond a misunderstanding of banking and finance on your part. But your statement quoted here just flat isn't accurate.
It's only in your imagination that the Fed pays the bond issuers anything.
But your statement quoted here just flat isn't accurate.
Ummm...
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