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These actions have had a big impact on the Fed’s balance sheet. As of June 2009, its total assets had risen to over $2,000 billion compared with $852 billion in 2006, and only 29 per cent of these assets were Treasury securities, compared with 91 per cent in 2006. (FT)
See this is the type of misleading information that gets people like you in trouble by seeing what isn't really there because instead of research stuff yourself you rely on others with an agenda.
If I read this article I am to presume the Fed balance sheet has grown steadily from 852 billion to 2 trillion since 2006 as of June 2009. Well, technically thats true but worded such as to prove that while figures don't lie, liars can figure.
The truth is the Fed balance sheet shot up to 2 trillion last Dec from 800 billion and hasn't increased since. So another liar could also truthfully say that the Fed balance hasn't risen in almost a year.
Neither version is really accurate though both are technically correct.
See this is the type of misleading information that gets people like you in trouble by seeing what isn't really there because instead of research stuff yourself you rely on others with an agenda.
If I read this article I am to presume the Fed balance sheet has grown steadily from 852 billion to 2 trillion since 2006 as of June 2009. Well, technically thats true but worded such as to prove that while figures don't lie, liars can figure.
The truth is the Fed balance sheet shot up to 2 trillion last Dec from 800 billion and hasn't increased since. So another liar could also truthfully say that the Fed balance hasn't risen in almost a year.
Neither version is really accurate though both are technically correct.
the relevant part is the same either way, that the fed balance sheet has grown to 2 trillion dollars.
the relevant part is the same either way, that the fed balance sheet has grown to 2 trillion dollars.
Actually the size of the fed balance sheet isn't whats relevant. It's the quality of the assets thats relevant, same as would be the case for anyone else's balance sheet.
it is all relevant. The FED has created a huge monetary base with long-run potential to be loaned into the economy. This is a situation that it cannot allow to happen without disastrous consequences. Bank reserves are a large component of that monetary base. To sterilize (or neutralize their lending potential), the FED can pay interest on reserves. There is no free lunch here for the FED. It could be doing this for many years to come, during which time it becomes harder for it to handle its monetary actions. Paying interest on bank reserves of $800 billion at 3 percent, say, costs $24 billion a year. The FED ordinarily turns its earnings over to the Treasury. This means that the FED’s earnings will be $24 billion lower (it going to the banks to sterilize their reserves) and the revenues to the government are $24 billion lower.
Follow the money: The FED buys mortgage-backed securities. The government ends up giving up $24 billion annually to the FED who pays it to the banks. The present value of this is a very substantial amount of wealth transferred from taxpayers to the banks. Bank stocks will go up in price when the FED starts paying higher interest on reserves, if not sooner.
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