The Fed now owns nearly 1/3 of all U.S. mortgages

Re:The Fed now owns nearly 1/3 of all U.S. mortgages by jdm2212 on Wednesday September 09, 2020 @10:52AM (#24421649)

No, the guaranteed negative return is only if you expect rising inflation. Whether $1T in new money turns into inflation depends on what people choose to do with the new money. If they're all terrified about economic uncertainty, they won't spend the new money, and there won't be inflation.

But you're right insofar as the Fed is trying to change inflation expectations by printing money. But so far they've failed because no one believes they'll actually let inflation happen once the economy recovers. Hence Jerome Powell's recent statements about the Fed changing how it trades off inflation against economic growth. It's a way to more credibly commit to letting inflation actually happen.

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Re:The Fed now owns nearly 1/3 of all U.S. mortgages by rorykoehler on Wednesday September 09, 2020 @03:02PM (#24424540)

It seems much of it got dumped into TSLA.

Didn’t the fed announce they would run inflation a bit hot for a while just last week?

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Re:The Fed now owns nearly 1/3 of all U.S. mortgages by jdm2212 on Wednesday September 09, 2020 @05:13PM (#24425963)

Even if a bunch of people used cheap money to buy TSLA, that means a bunch of other people now have lots of money they made selling TSLA.

So someone, somewhere, is sitting on cash, which is deflationary and not what you want in a weak economy.

The cure for that problem is cheap money plus expected inflation (cheap money so people can get cash, expected inflation so they go spend it). The Fed can make money cheap, but it can't force people to expect inflation. It can do stuff to encourage that expectation, though, and yeah it's doing just that.

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