DRTOA – It looks like it will be to infinity and beyond for the US fiat currency
by Dave Kranzler, Investment Research Dynamics:
The Fed has announced that it was ending QE because unemployment was improving and the economy was fine. But it’s a lie. The Fed is not ending QE. It will still be reinvesting the proceeds of the bonds on its balance sheet – $4 trillion worth of bonds – as they mature. It also reinvests the interest income on this portfolio. Interest that is paid with printed money. This is not “ending QE.” It’s perpetual QE.
If the Fed wanted to end QE, why doesn’t it withdraw the $2.6 trillion in printed cash that it has injected into the Too Big To Fail Banks? The banks have roughly $2.6 trillion in cash sitting in their “excess reserve” accounts at the Fed. “Excess reserves” are cash held by banks that does not need to be set aside against bank assets in case the assets decline in value. I say “assets” loosely because a fair percentage of these assets are nuclear garbage that even the Fed won’t buy from the banks. This cash in excess reserves, by the way, is getting .25% interest paid on it by the Fed, with printed money. If you invest your own cash in a short term T-bill, you’ll get .01%.