I am under the impression that to reduce the balance sheet means to downsize debts owed to the FED. Collect loans. US Treasury Bonds are loans and does that mean that the FED is calling in those loans? Is that correct? The "fiat' money and quantitative easing always confuse me and seem related. Anybody understand and can give the short honest answer?
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T-Bills are money the Treasury owes to actual people or outside entities that actually paid real money to purchase the bills/bonds with expectation of a return on investment.
Quantitative easing is a fancy term for monetizing the debt, where the Treasury prints more money (issues certificates equal to cash) to loan itself to pay its own debts. It doesn't have to pay itself back, since it can forgive itself its own debt. As long as there is enough confidence in the Dollar (which there is now), the US economy is growing (which it is at historical highs), and the global financial lending markets are stable (they are, currently, but the future is concerning due to many global reasons including a real estate downturn), so right now it makes sense to do this. Six months or a year from now, especially if the Trump Administration is dragged through the ditch to Impeachment and jail, it would be ill-advised if not impossible.
this goes back to the financial crisis. the fed bought all the toxic assets that collapsed wall street and made the wall street banks and AIG whole. the fed has been sitting on trillions of dollars in worthless mortgage backed securities, CDO's and other worthless securities ever since. now they are selling them off to get them off their balance sheet. i imagine writing them off as bad debts is closer to the truth.
they won't be calling in treasury bonds. probably just selling more to help them over the bailout cost.
Thank you. My Internet link won't download that. Perhaps a simpler question is "How much does the USTreasury(taxpayers) owe to the FED? I believe the FED was the "buyer of last resort" for the loans (Tbills) that supported Quantitative Easing. Any figures available?\
My Internet link will not download that. Thank you. I'm thinking that the FED was the "buyer of last resort" for TBills to create Quantitive Easing. Perhaps an excerpt from that article would be enlightening. I appreciate the effort.
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Thank you. My Internet link won't download that. Perhaps a simpler question is "How much does the USTreasury(taxpayers) owe to the FED? I believe the FED was the "buyer of last resort" for the loans (Tbills) that supported Quantitative Easing. Any figures available?\
See attachment.
Thank you. The way I read that is what I thought. The FED loaned the US Treasury by buying TBills to support QE. That would be billions of dollars. The FED carries the TBills in their asset column jsut as if they have a deposit of money and the "juiced reserves". TBills, justify more loans. Now it is payback time, or obfuscatively stated as "unwinding" by all pertinent players. The recent $40 billion one month unwinding spooked the markets, so if QE debt by TBills is $2+ trillion, perhaps 4 trillion, then NASA "we have a problem." Unwinding is "payback" as I previously stated. Taxpayers must pay back the debts(TBills). I perceive this as catastrophic and may cause a lack of "confidence" that supports the US "fiat" Currency. The FED is a "private" Central Bank, technically not part of the US Gov't. If I am wrong, please enlighten me and again many thanks for the attachment.
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