This is my burning question of the day and I'm not sure I really get the answer. But it seems to me BTFP = QE. Reason is banks will be just getting cash. BOOM out of nowhere brand new baby cash. And in a year they can just give the Fed back some T bonds. Well isn't that just an open market purchase by another name?
And speaking of open market transactions what about reducing the Fed balance sheet? Is that going to keep going on, stop, or increase to compensate for BTFP?
Can someone with wisdom about the Fed help me out? 2 trillion is a big number and my friend is getting kinda nervous and wants me to ask you all for him.
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