As September rolled into October, the US central bank’s monetary madness blew all over us like a fountain of foam in a windstorm. First, the Fed burst into $75 billion in overnight funding operations due to obvious shortages all over the map in bank reserves. Then the surge spread beyond that into longer-term temporary funding of $30 billion twice a week because the overnight loans were not up to the needs. That still not being enough to end the troubles, the Fed’s rapidly expanded the overnight operations to $100 billion and doubled the term operations to $60 billion. Those operations still did not end the troubles the Fed’s tightening had created, so the Fed decided to flood the murky money pools of this world with $60 billion in frothy treasury purchases. Although this money was permanent reinflation of the Fed’s balance sheet (unlike the temporary overnight and term repos), the Fed told us they are not QE (never mind that exactly like all previous QE, they give new fiat money with interest to primary treasury dealer banks that buy treasuries from the US government). The banks rushed in with more than four times the offers to resell treasuries they had purchased from the government to the Fed than what the Fed was willing to buy.
And, then, all of that pumping of of new fiat money into the monetary system was still not enough, so the overnight and term repos (essentially loans) had to continue. Then, because all of those operations together are still not enough, the Fed promised the repos will continue, “at least,” through January, 2020, and the creation of new money injected into the banks will continue, “at least,” into April.
But there is no problem here, and the Fed assures us none of this is QE, even though the aggregate of all of that is easily as big as any previous rounds of QE. By the end of the Fed’s already slated actions, it is estimated the Fed will have injected, at least, $850 billion dollars into the economy!
In all, a tremendous amount of churn out the flood gates in just one month as the Fed opened its unlimited reservoir to pour a river of money into the banks and economy to save the rich. It leapt back into doing that so quickly it couldn’t even wait until its regularly scheduled October meeting to make a studied decision. The immediacy says this was clearly an emergency, reactionary decision.
But that is not QE4ever!
Not according to the Fed.
You see, it cannot be called QE because a return to QE would be admission of catastrophic economic failure precipitating from of the Fed’s quantitative tightening regime, which I labeled “The Fed’s Great Recovery Rewind,” having seen where it would take us before any of the above madness and mayhem. It also cannot be called QE because, as pointed out in my latest QE4ever article, that would be illegal since QE forever is the same thing as monetizing the national debt, expressly forbade by congress.
Read the rest here: http://thegreatrecession.info/blog/quick-recap-of-the-feds-madcap-madness/