DATA VIEW (NOT A FORECAST): REAL SIZE OF FED STIMULUS UPDATE
Despite all the hype raised about fed printing 3.5 trillion USD during times of economic stimulus, the real amount of help to economy is much smaller - it is approximately 900 billion USD
The rest of "printed" money (2.6 trillion USD) is held at the Fed or traded on federal funds market by the recipients of the stimulus (key US financial institutions, who received reserve balances for their MBS or Treasuries)
Apparently, recipients are unwilling to lend out the full amount of stimulus to the economy; they prefer to receive fixed guaranteed rate on excess reserves at the Fed (0.25%) or to lend them out at federal funds market (at approximately 0.14%) on overnight basis.
Is the whole fed stimulus some kind of plot to make a positive impression on financial markets, while keeping inflation at bay? Ask Yellen!=)
The rest of "printed" money (2.6 trillion USD) is held at the Fed or traded on federal funds market by the recipients of the stimulus (key US financial institutions, who received reserve balances for their MBS or Treasuries)
Apparently, recipients are unwilling to lend out the full amount of stimulus to the economy; they prefer to receive fixed guaranteed rate on excess reserves at the Fed (0.25%) or to lend them out at federal funds market (at approximately 0.14%) on overnight basis.
Is the whole fed stimulus some kind of plot to make a positive impression on financial markets, while keeping inflation at bay? Ask Yellen!=)