Let’s say the Federal Reserve has an operation that pays big financial institutions not to make loans to the public. The Fed facility sells its bond to these huge institutions with an understanding that it will buy back those bonds at the going interest rates plus a little extra to entice these private money lenders to participate. Now say the Federal Reserve raises interest rates three quarters of an interest rate. How much does that mean the Fed is now paying on these “reverse repo” loans. How does $100 million per day grab you?
Did you know that banks can park money with the Fed beyond their reserve requirements (money banks are forced to not lend out on deposits they are hold)? Of course, the Federal Reserve pays interest on those over balances and when the Fed raises interest, well it has to pay more on those excess reserves. How much you ask? How about $141 million a day on $3.13 trillion in excess reserves.
With the Fed fighting inflation like this is it any wonder the government has to keep flooding the economy with more US dollars?
Not much wiggle room left after years of 0% interest and QE Infinity. Thx and 0bama (and W)
It’s only Monopoly money now at this juncture!
Fed?
Nah.
You mean, “American taxpayers”
Hey, if you have $10,000 laying around, go get your iBonds, they’re paying almost 10%.
https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm
Obvisouly don’t do it if you think the FED will collapse.
I go online. And kill trolls. I cook their testicles. Into diamonds. And sell them to purple elves. For flaming swords.
Now. Give me a sammich.
After years of 0 percent interest and QE Infinity, there isn’t much space for maneuver. Obama, thank you basketbros