Lee Adler of Wall Street Examiner does not agree with the authors of this article. In his own words:
The mindlessness of that article…
it…
well…
it stupifies me.
First it’s not news. The Fed has been telling us for the past two months that it would hold the balance sheet level after ending QE.
The purchases the Yahoos are talking about are ROLLOVERS of existing holdings. The add ABSOLUTELY NOTHING to the system. The idea that it will do anything to maintain ease is patently and absurdly FALSE. In fact it is the EXACT OPPOSITE of the truth.
Mind boggling.
Fed May Buy $300 Billion in Treasuries After QE2
By Daniel Kruger and John Detrixhe
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its $2.86 trillion balance sheet to keep interest rates low.
While the $600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as $300 billion of government debt over the next 12 months without adding money to the financial system.
The central bank, which injected $2.3 trillion into the financial system after the collapse of Lehman Brothers Holdings Inc. in September 2008, will continue buying Treasuries to keep market rates down as the economy slows. The purchases are supporting demand at bond auctions while President Barack Obama and Republicans in Congress struggle to close the gap between federal spending and income by between $2 trillion and $4 trillion.
“I don’t think the Fed wants to remove accommodation in any way, shape or form,” said Matt Toms, the head of U.S. public fixed-income investments at Atlanta-based ING Investment Management, which oversees more than $500 billion. “It’s quite natural for them to reinvest cash,” he said. “That effectively maintains the accommodative stance.”
Keep reading here: Fed May Buy $300 Billion in Treasuries After QE2 – Bloomberg.
