Yes, POMO also has MBS and Agency entries, which is what I
was asking about. We agree on 300 Bln. in treasuries, but
you claim that creating money out of thin air to buy MBS and
agencies was not printing. Treasuries went to SOMA account as
well, that's where they are sitting. So, how are treasuries
different from MBS or agencies if they all wind up on SOMA,
here?
newyorkfed.org
The Fed can print and buy stocks, as Bernanke Doctrine states.
It will still be printing. They will be added to SOMA account.
Now, I agree with you, if all that just sits in reserves,
we'll see no inflation, but that does not mean the amount
was not printed.
Now, the Fed can REVERSE the process and SELL MBS, agencies,
or treasuries from their SOMA account. That would be reduction
of the monetary base, and like shoving dollars back into the
printing press. If that ever happens, then yes, monetization
will reverse and the effect was temporary. I doubt it will.
Over the past year the Fed monetized or printed 1.75 Trillion,
which is double the pre-crisis monetary base level. Where it
sits is another question, but if they tried to reverse this,
the markets will crash. |
