Loading ...“QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it. /end “
Dear Mr. K,
If what were happening was as you described, then an argument could be made that you are correct. Swapping existing reserves for t bills, wouldn’t actually have much effect. However, this is EMPHATICALLY NOT what is happening. And its very simple to see this. Might I direct you to your own organizations website: https://fred.stlouisfed.org/series/EXCSRESNS
As this clearly shows, bank excess reserves held at the fed, have actually been increasing since September. So it is mathematically impossible that those prior reserves have been used to purchase the new t bills in question. Instead, what has happened is the Fed has created new dollars to buy those t bills and to simultaneously inflate banks reserves held at the fed as well. So your question should not be about how does SWAPPING and asset affect prices, but rather how does CREATING an asset out of thin air effect prices.
A person could be forgiven for incorrectly projecting what may happen in the future as the result of a certain policy. That is understandable. But Mr. K, your complete and utter ignorance not of the future, but of the present, your abject failure to grasp reality that is staring you in the face, courtesy of your own organization and detailed on its own website, is utterly appalling. You sir, are completely out of touch with reality and are completely unfit to hold any office of any sort. You should be immediately housed in a facility for the mentally impaired, until such time as your grasp of reality may be restored. / end