/biz/ - Business & Finance

Please stop listening to bond shills.

The fed does not buy treasuries from banks on net (banks are not net sellers), hence it is not really buying from people who can accept reserves as payment. Hence the reserves must be converted to deposits by the banks for the scheme to work.

If it were otherwise, the banks are losing deposits and gaining reserves, which by the bond shills own logic are a much more limited form of money and this would not be a sustainable or attractive scheme for the banks to participate in. They'd stop selling the Fed treasuries.

But ofc, they can serve as the middle men converting reserves to deposits as in pic related, so it's no problem. The Fed may not own the printer, but the banks are happy to rent it out to them.

For further viewing, this channel does a good job:
https://www.youtube.com/watch?v=VsNR4yd4oYA

Essentially he is explaining the same transaction of QE which I just did, plus showing how the Fed's balance sheet growth directly feeds money supply growth to explain the widening gap between credit creation and money supply growth.

>>49983927

Reminder that these guys (along with Steven Van Meter) are all bond bulls who never foresaw inflation despite huge money printing, and were (predictably) totally fucking blindsided by the recent bond market rout. If you can't figure out printing money results in inflation, you aren't worth listening to period. Also, they are just straight up wrong or dishonest about QE when they shill the "it's just bank reserves bro ;^)" line. Pic related.

But do note how that line serves the government, who do not want people to make the connection between printing and inflation. The government's ideal case is to print/spend a lot of money, but have everyone buying their bonds for negative real yields, because those buyers didn't expect the printing to devalue the currency. Hence the propaganda, and attempts to subvert peoples' understanding of basic economics, and to corrupt the metrics which might predict inflation ("adjusting" CPI, suppressing gold with paper, etc).

Fed shills? Morons? Who knows, but for our purposes: same difference, not worth listening to.

>>49952797

For your own good don't listen to that guy. I'm not saying they don't cut rates soon. Things are coming to a head fast. I'm saying Snider's whole framework around QE is bunk. I don't know why he pushes it but he was wrong on inflation and seems to have an agenda.

>>49626984

Zombification and malinvestment aside, QE has increased broad money supply.