How The Federal Reserve Is Sucking And Blowing At The Same Time
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Quantitative easing (QE) adds liquidity (unencumbered dollars) to the economy by swapping cash for Treasuries and MBS. Quantitative tightening (QT) is the opposite of that; the Fed takes in unencumbered dollars and provides interest-bearing Treasuries. In this piece, we show how the Fed is doing both simultaneously.
The System Open Market Account (SOMA) is how the Fed interacts with the market economy. It is well established that as the balance sheet of…
