The Fed kept rates too low for too long, reinforcing the wealth and income disparities and creating new bubbles we will have to deal with in the not-too-distant future.
Liquidity dried up, interest rates spiked, and the Fed stepped in to save the day.
On Dec. 12 a New York Fed statement said its trading desk would increase its repo operations around year-end "To ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures."
The US doesn't have negative rates but the Fed is giving banks negative credit limits.
The Fed needed a couple more years to start draining the pool, and then did so in the stupidest possible way by both raising rates and selling assets at the same time.
The argument: The Fed's current liquidity injection program is not a genuine effort at quantitative easing by the US central bank.
As a result, the market is already looking through the current liquidity injections to the time when the Fed goes "Cold turkey" once again.
https://www.mauldineconomics.com/frontlinethoughts/prelude-to-crisis
Liquidity dried up, interest rates spiked, and the Fed stepped in to save the day.
On Dec. 12 a New York Fed statement said its trading desk would increase its repo operations around year-end "To ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures."
The US doesn't have negative rates but the Fed is giving banks negative credit limits.
The Fed needed a couple more years to start draining the pool, and then did so in the stupidest possible way by both raising rates and selling assets at the same time.
The argument: The Fed's current liquidity injection program is not a genuine effort at quantitative easing by the US central bank.
As a result, the market is already looking through the current liquidity injections to the time when the Fed goes "Cold turkey" once again.
https://www.mauldineconomics.com/frontlinethoughts/prelude-to-crisis
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