Has the Fed reduce its balance sheet in recent months and what activities would cause it to increase and decrease? What does this have to do with banks paying bank their TARP money and will this cause a reduction in the balance sheet? Does the Fed do a good job funding itself? Thanks
Anyone? Link, reference, or a response would be good?
The Federal Reserve has the perk of printing new money. The Federal Reserve literally has an unlimited budget.
A Fed Funds Rate of 0%-0.25% is a massive bailout to the banksters. They borrow at 0.25% and lend at 6%, using leverate ratios of 10x-30x or more.
This massive bailout is in addition to the explicit TARP bailout. With this perk, the banks were able to repay their TARP loan.
The Federal Reserve’s operations aren’t free. Everyone else pays the cost as inflation.