The Fed has $4 trillion of assets on their balance sheets right now. They'll find something to sell.
Anyway, they're not buying subprime auto loans or overinflated stocks. They're buying long term risk-free debt, and are going to start buying commercial paper (which has some risk, but not much).
They really did buy lots of different stuff during the financial crisis, and yet they never lost control of inflation.
> Anyway, they're not buying subprime auto loans or overinflated stocks. They're buying long term risk-free debt, and are going to start buying commercial paper (which has some risk, but not much).
Eligible Collateral•Collateral eligible for pledge under the PDCF includes all collateral eligible for pledge in open market operations (OMO); plus investment grade corporate debt securities, international agency securities, commercial paper, municipal securities, mortgage-backed securities, and asset-backed securities; plus equity securities. Foreign currency-denominated securities are not eligible for pledge under the PDCF at this time.
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equity securities == stocks. I admit I was exaggerating about the subprime auto loans, but they also state that: Additional collateral may become eligible at a later date upon further analysis., so who knows?
I agree with you they have plenty of stuff old stuff to sell from QE 1-4, but this certainly is a new class of assets from them, and is almost certain to lose money.
Anyway, they're not buying subprime auto loans or overinflated stocks. They're buying long term risk-free debt, and are going to start buying commercial paper (which has some risk, but not much).
They really did buy lots of different stuff during the financial crisis, and yet they never lost control of inflation.