Tweet
From Hussman:
http://hussmanfunds.com/html/fedirrel.htm
" Alright. So when the Fed is easing, it increases the monetary base by purchasing Treasuries on the open market. When the Fed is tightening, it reduces the monetary base by selling Treasuries on the open market. Now that we're clear on what the Fed does, let's take a look at why it is irrelevant."
They have been tightening for the last year and I haven't seen them sell one security.
So either:
a) I'm missing something
b) Hussman is wrong
My theory: Congress is flooding the market with treasuries, thus devaluing their price and pushing up the rate up. The fed has to buy them just to make sure that the funds rate doesn't skyrocket. So, instead of selling, they're just buying at a slower pace.
You can find open market operations here:
http://www.ny.frb.org/markets/openmarket.html
If you can find it where they sell some treasuries, please let me know.
http://hussmanfunds.com/html/fedirrel.htm
" Alright. So when the Fed is easing, it increases the monetary base by purchasing Treasuries on the open market. When the Fed is tightening, it reduces the monetary base by selling Treasuries on the open market. Now that we're clear on what the Fed does, let's take a look at why it is irrelevant."
They have been tightening for the last year and I haven't seen them sell one security.
So either:
a) I'm missing something
b) Hussman is wrong
My theory: Congress is flooding the market with treasuries, thus devaluing their price and pushing up the rate up. The fed has to buy them just to make sure that the funds rate doesn't skyrocket. So, instead of selling, they're just buying at a slower pace.
You can find open market operations here:
http://www.ny.frb.org/markets/openmarket.html
If you can find it where they sell some treasuries, please let me know.