Originally Posted by BrianTheMick2
They can't borrow any money from the Fed (a non-Swiss institution) Did you just post about them randomly in response to everyone laughing about you saying that the Fed borrowing and the Fed buying being the same?
If so. I apologize. I was not aware that this was the "bring up random things in response to people laughing at your last post" thread.
The Fed borrowing and the Fed buying is the same. I mean theoretically okay the Fed could give the commercial banks their bonds back, but it's never going to happen.
You are just taking the Fed at their word.
If they give the bonds back to the commercial banks, the commercial banks are just straight bank in the predicament that they are in now.
People are completely delusional. They think oh well the Fed just raises interest rates to 6 percent and then the inflation just magically disappears and its back to zero percent interest rates again.
That doesn't make any sense. Why is the inflation rate just going to go back down to 2 percent and the Fed back to zero.
This is a total fantasy. In the 70s when inflation got started because of President Johnsons spending it took 46 years to get inflation back down to 2 percent.
Well we printed a lot more money during Covid and QE 1, 2 and 3 and 4 then during the 60s.
People who were calling for inflation because of QE were right. There was just a lag from the monetary policy. A lot of the inflation went into the stock market and housing and Bitcoin initially, a big rally in the dollar cooled commodity prices to some degree, but the the inflation is now out of the bottle. Getting it back in will be almost impossible. The Fed will be messing around with these rates for years and years and years trying to get inflation under control, so returning these borrowed bonds to the commercial banks aint ever going to happen.
When the Fed started QE and the balance sheet was a trillion they kept harping on about how they would sell the bonds back and reduce the balance sheet. It never happened. They tried and had to reverse course every time. The balance she is now 8 tillion heading to 10 trillion. This is the exact same thing. These bonds will be stuck on the Fed Balance sheet until they mature 10 to 30 years from now.
Last edited by Maximus122; 03-17-2023 at 09:17 AM.