Teach Me Daddy
Manage episode 418238172 series 3474376
This story was originally published on HackerNoon at: https://hackernoon.com/teach-me-daddy.
I rely on the writings of my macro forefathers and translate their ideas into what I hope is a more digestible and entertaining format.
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Recently, the Fed has sterilized its tapering in the last few weeks, which in addition to the Treasury’s large liquidity injection into the credit system has driven the rally in risk assets. The Fed credits member banks’ Fed accounts with money, and in return, banks sell the Fed US Treasuries and/or US Mortgage-Backed Securities. This is how the Fed “prints” money to juice the financial system. In effect, the money multiplier for RRP balances at the NY Fed is 0x, vs a non-zero multiple when deposited with any other financial intermediary.
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