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- The Fed announced it will buy $40 billion per month in T-bills under something it calls “reserve management purchases.”
- This is QE in function and effect. The reserve requirement is zero; therefore “reserves” is a deliberate misnomer and obfuscation. The operational mechanics of “reserve management purchases” are identical to prior QE programs.
- These operations create permanent additions to bank deposits at the Fed until the Fed reverses them, which may be never. When in excess of economic needs, these deposits fuel asset price inflation.
This report disdains Wall Street mythology, shows the real data and illustrative charts that clearly define the issues. It suggests your investment strategy for dealing with the facts, as opposed to the Fed or Street narrative.
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