What a time to be alive. The Fed is: 1. Hiking 2. Shrinking its balance sheet via QT 3. Injecting up to $2 TN in liquidity via BTFP which is "stealth QE"
Discussion
“We have no idea what we’re doing, so do everything”
Bold strategy, Cotton.
I think they know exactly what they are doing. They know financial repression erodes the treasury’s debt over time so they make it look like they are fighting inflation but do QE under the table to keep it higher. That way they keep having a reason for rates increases. Higher rates + inflation = “gov debt fading away”
But I think bond and usd buyers will get tired of it.