Prior to 2008, the Fed could accelerate or decelerate inflation by expanding or contracting the monetary base and therefore bank reserves with open market operations and/or with repo loans to dealers. Since 2008, however, the Fed has paid interest on excess reserves equal to or even higher…
In March, the Federal Open Market Committee (FOMC) signaled it could begin shrinking the Fed's balance sheet sometime later this year. However, with limited official details about what that means and none forthcoming from last week's FOMC press release, many questions remain: How will the Fed decide…
Of the many questions reporters asked Janet Yellen on Wednesday, at her press conference following the FOMC's decision to raise the Fed's policy rates, my favorite was the very first, posed by the Financial Times' U.S. Economics Editor, Sam Fleming. Here is Mr. Fleming's question: [You've stated that…
It is well known that the Federal Reserve System expanded its assets more than four-fold during and after the 2007-09 financial crisis by making massive purchases of mortgage-backed securities and Treasuries. The balance sheet has not returned to normal since. Total Fed assets stand today at $4.45…
If you're a regular Alt-M reader (and may the frost never afflict your spuds if you are), I needn't tell you that I'm the last person to exalt the pre-2008 Federal Reserve System. Among other things, I blame that system for fueling the 2003-2006 boom, and for…