1 thought on “What does the Federal Reserve ’s debt shrinkage and what are the effects?”
Alex
It is not a deflation, but to slow down the scale and speed of buying debts. Until QE exits QE, this process can be called loose shrinkage, that is, TAPER. Since the epidemic occurs, in order to ensure that the economy does not collapse, the Fed has adopted an extremely loose monetary policy, including but not limited to the following points: First of all To 0 ~ 0.25%. It is the launch of the asset purchase plan. In March, the Fed launched an unlimited quantitative easing policy in March, buying U.S. Treasury bonds and housing mortgage support loans (MBS) regardless of the consequences. three, actively innovate policy tools, enter secondary market transactions through SPV to help economic entities. four, reduce capital constraints and reserve ratios, and encourage commercial banks to expand credit support. among the second points, unlimited quantitative easing policies refer to the Federal Reserve to purchase $ 80 billion in Treasury bonds and $ 40 billion every month. At present, the Fed is still implementing this decision. But the informal and overly loose policies must be exited. At present, it has reached the time node that needs to be exited. To reduce to 0, this process is a loose shrinkage, which is the TAPER often hear. But looseness does not mean to raise interest rates soon.
It is not a deflation, but to slow down the scale and speed of buying debts. Until QE exits QE, this process can be called loose shrinkage, that is, TAPER.
Since the epidemic occurs, in order to ensure that the economy does not collapse, the Fed has adopted an extremely loose monetary policy, including but not limited to the following points:
First of all To 0 ~ 0.25%.
It is the launch of the asset purchase plan. In March, the Fed launched an unlimited quantitative easing policy in March, buying U.S. Treasury bonds and housing mortgage support loans (MBS) regardless of the consequences.
three, actively innovate policy tools, enter secondary market transactions through SPV to help economic entities.
four, reduce capital constraints and reserve ratios, and encourage commercial banks to expand credit support.
among the second points, unlimited quantitative easing policies refer to the Federal Reserve to purchase $ 80 billion in Treasury bonds and $ 40 billion every month. At present, the Fed is still implementing this decision.
But the informal and overly loose policies must be exited. At present, it has reached the time node that needs to be exited. To reduce to 0, this process is a loose shrinkage, which is the TAPER often hear. But looseness does not mean to raise interest rates soon.