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As Fed Cuts Bond Buying With Balance Sheet Near $7 Trillion, Some See ‘Unqualified Good News’

Signs of stress are abating. For now, anyway.

Signs of stress are abating. For now, anyway.
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8 comments on “As Fed Cuts Bond Buying With Balance Sheet Near $7 Trillion, Some See ‘Unqualified Good News’

  1. H-Man, it all works well until the US is not a reserve currency. If we lose that status, we become a banana republic. My concern at this juncture is whether the inflation genie is still in the bottle.

    • And what currency replaces the dollar?

      • I think the only threat to USD as reserve currency is if Europe ( or just Germany- we will see how EU progresses) forms an even stronger international pact with China, Russia and EM and they agree to trade in contracts denominated in Euros ( or Deutsche Marks)

      • What currency replaces the dollar? A question as a defense of the dollar, assumes we can see into the future.

  2. Thank you for aggregating and summarizing. Very helpful

  3. If inflation became a problem, the Fed would get down on their hands and knees and thank their lucky stars! Then all they would have to do is freeze the balance sheet and raise short term rates. That would be like hitting the staples that was easy button. I always get a kick out of folks worrying about inflation in this type of environment. Meat prices may go up, but it is a general increase in price level that matters. Trust me- compensation and commodity prices are not going to drive an increase in the price level. Even if the Fed’s balance sheet goes up and money supply increases, velocity is in the process of dropping through the floor. You think banks are going to lend a lot of money other than Fed/Treasury programs?

  4. Meat price doubling is nothing (for inflation) compared to incomes at zero (or unemployment only covering a third of the previous salary and little prospect of re-hire at the same level), especially as rents (just like mortgages) or other fixed repayments will not be forgiven (mostly just deferred).
    I thought inflation was when there was high demand AND bidding up to higher prices (usually in combination of velocity of money), so it does not seem likely that people without money will bid anything up.
    Therefore I agree the Fed is safe (especially in the herd of every other world banking/financial institution) printing to stave off The Great Depression 2.

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