What is fueling the S&P's growth?

Discussion in 'Economics' started by kmiklas, Jul 21, 2016.

  1. eurusdzn

    eurusdzn

    When notes and bonds on the fed balance sheet mature, the fed balance sheet should shrink and bank reserves drop. This is the temporary money effect. I dont think the fed is allowing this to happen. Instead the fed creates the same credit again and buys a new note or bond again. This in effect is a constant demand for government debt from the fed averaging about 200-300 billion a year.
    Why would the fed relinquish this established "tool" of theirs, and reduce bank capital levels?
    Seems to me this balance sheet size is considered low and responsible as a percentage of GDP in this new normal.
    I think the fed is now locked into a global equities and currency game and will sprinkle in a rate hike or two when if it will not cause much damage.
    The high watermark, holy shit event, will be any expansion of this balance(qe4) sheet or permanent "people's QE" . We are just muddling along propping up risk as usual at this point IMO.
     
    #21     Aug 5, 2016
    i960 likes this.
  2. i960

    i960

    I'm not talking about the Fed I'm talking about the BOJ and SNB. If you think they aren't involved in the US markets in any way you're wrong on that.
     
    #22     Aug 6, 2016
  3. J_Smith

    J_Smith

    J_S

    Screenshot_2016-08-14-16-33-10_1.jpg
     
    #23     Aug 14, 2016
  4. J_Smith

    J_Smith

    J_S

    Screenshot_2016-08-14-16-47-22_1_1.jpg
     
    #24     Aug 14, 2016