Read the fine print, QE is not really over

By Robert Romano “[T]he Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable […]

Did $3.5 trillion of Fed easing even work?

By Robert Romano The Federal Reserve’s tapering of quantitative easing continues, dropping from $25 billion a month of securities to $15 billion, according to the central bank’s latest statement. Since August 2007 when the financial crisis began, the Fed has dramatically expanded its balance sheet by $3.5 trillion, from $907.5 billion to $4.493 trillion. Today’s total includes $2.446 trillion U.S. […]

Yes, bank lending does create money

By Robert Romano “Fractional reserve banking is a tautology. Banks aren’t in business, nor could they remain in business if they simply warehoused money. Instead, they borrow money from depositors seeking a return on their savings, and who don’t need access to their savings right away, only to lend the money borrowed to individuals who do need it right away.” […]

Did anyone even read the last Fed audit?

By Robert Romano Sen. Rand Paul (R-Ky.) on May 13 sent a letter to Senate Majority Leader Harry Reid (D-Nev.) warning that he was placing a hold on of three nominees to serve as governors of the Federal Reserve. The nominees are Stanley Fischer for vice chairman, and Lael Brainard and Jerome Powell for the board of governors. Paul is […]

Can we inflate the debt away?

By Robert Romano After a brief slowdown in fiscal year 2013 that ended September 30 — when the national debt grew “only” by $671.9 billion at a 4.18 percent rate — 2014 is shaping up to be another year awash in red ink. So far, since October 1, the debt has skyrocketed another $537.9 billion. And we’re not even halfway […]

Will Janet Yellen stop printing $900 billion a year in 2014?

By Robert Romano In January, Janet Yellen will be easily confirmed to be the next head of the Federal Reserve. One question for the New Year that is certain to come up once every six weeks will be the Fed’s Open Market Committee, and specifically, whether there will be more tapering of the central bank’s purchase of $900 billion of […]

Stop the presses! Fed taper won’t stop its $75 billion a month money-printing

By Robert Romano Stop the presses! Instead of adding $1.02 trillion of treasuries and mortgage bonds to its balance sheet a year, the Federal Reserve has announced starting in January it will just be adding a “mere” $900 billion. For that, headline writers the world over are proclaiming that the long-sought-for recovery is finally at hand. The Washington Post editorial […]

No way out of Fed’s QE trap

By Robert Romano It took a little while, but the selloff of U.S. treasuries abroad has ceased for now in August and September — a record $127.4 billion was sold between March and July. It had marked the largest drop in foreign holdings of treasuries on record, detailed monthly Treasury data going back to the year 2000 reveals. Most of […]

Fed’s $1 trillion a year subsidy to banks to continue under Yellen’s watch

By Robert Romano With the filibuster against most presidential nominees now eliminated — well, sort of, Senate Democrats did not actually amend the rules, they just voted to pretend they don’t exist — the confirmation of Janet Yellen to be the next chair of the Federal Reserve is all but certain. Which is too bad. Of all nominees, blocking cloture […]

Former Fed official: ‘I’m sorry, America’

By Robert Romano Since August 2007 when the financial crisis began, the Federal Reserve has expanded its balance sheet by more than $3 trillion, including $1.35 trillion of U.S. treasuries and $1.43 trillion of mortgage-backed securities. It was “an unprecedented shopping spree,” says the former Fed official who headed up the program to buy the mortgage bonds in 2009, Andrew […]

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