The Danger of Quantitative Tightening

[Cinvalo]

Source: http://www.corruptionofrealmoney.com/education.php

Between 2008 and 2014, the Federal Reserve had created $3.5 trillion USD during the three rounds of Quantitative Easing (QE) and saved the world from collapsing into a new depression. These newly created money were used to buy government bonds and bonds from GSE(s) – (e.g. Fannie Mae). At the beginning of 2018, however, the Federal Reserve was talking about normalization of its balance sheet through Quantitative Tightening (QT). What does this mean? This article will explore QT, the normalization of Fed’s balance sheet and its implication to the markets around the world.

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http://www.corruptionofrealmoney.com/displayfullarticles.php?id=60#.WUUHA1z2Ix_

 

[Pirocco]

According to the Federal Reserves balances / data, the so-called "Quantitative Easing" was actually a "Tightening" instead. The Federal Reserve PAID its system member banks to NOT lend that new money to people. Remember the general prices runup ahead of the 2008 crisis? THAT were the real "Easing" years.
The motivation for this false suggestion of easy money is not hard to think. What do people do when they expect higher general price risings? They become willing to pay higher prices for speculated upon products. And waste their savings in the process. Which is exactly the Federal Reserves goal. They created AND lend out alot money ahead of the crisis, bought lotsa goods with it, and now want existing savings gone, as to not face that purchasing power competition anymore.

The 2000+ story in a nutshell.

 

[Pirocco]

Another balance that support aboves statement:
http://research.stlouisfed.org/fred2/series/REQRESNS
http://research.stlouisfed.org/fred2/data/REQRESNS.txt
Required Reserves of Depository Institutions
2001-01-01 38.346
7 years later
2008-09-01 43.411
2009-09-01 62.708
2010-09-01 67.032
2011-09-01 92.478
2012-09-01 108.066
2013-09-01 119.978
2014-09-01 137.094
2015-09-01 149.298
2016-09-01 167.612
2017-05-01 178.630
The Federal Reserve central bank demands higher reserves from its member banks.
How does that fit in the "easy money / easy lending" story?
I'd say NOT.

 

[leo25]

A great open talk about quantitative easing. Stick around for the talks after Ben Bernanke.