🚨ATTENTION🚨
💥There is news circulating that the FED has started QE with a PURCHASE of $20.47B in BONDS.
Is this really true⁉️ Something happened, let me explain:
👉There was an "ACCEPTANCE" of $20.47B in SOMA for the exchange of 3-year BONDS.
👉The System Open Market Account (SOMA) is the portfolio with which the FED executes monetary policy.
👉It contains Treasury bonds and other assets that the Fed has historically purchased.
What happened with the $20.47B⁉️ Were there purchases that increased liquidity in the system⁉️
👉That amount was a REINVESTMENT OF BONDS THAT HAD MATURED. In other words:
▪️It is not new money.
▪️It does not increase the size of the Fed's balance sheet.
▪️It is not QE (Quantitative Easing), because QE implies creating new money to buy assets and increase liquidity.
▪️They are predictable and scheduled purchases.
▪️They are like renewing a fixed term: you keep your investment alive, but you do not put in new money.
