Federal Reserve’s Balance Sheet Hits $2 Trillion

August 13, 2009 by · Leave a Comment
Filed under: Currency News 

One of the most important facts of this news piece is the FOMC’s decision to extend their quantitative easing (read: print money) program until October from the September deadline.  If we were in a recovery, then why would our central bank need to have more time to buy our own debt from ourselves aka: The U.S. Treasury?  You know, the more I think about this, the more I am getting the feeling that things are not in recovery and maybe the media has played up the green shoots recovery angle just a little too much.

Reuters, New York – The U.S. Federal Reserve’s balance sheet expanded in the latest week, thanks to a jump in Treasuries holdings, Fed data showed on Thursday.

The Fed’s balance sheet liabilities — a broad gauge of its lending to the financial system — reached $2 trillion on Wednesday from $1.974 trillion a week earlier.  The U.S. central bank’s holdings of U.S. government debt increased to $728.97 billion on Wednesday, up from $705.33 billion a week earlier.

On Wednesday, the Federal Open Market Committee, the Fed’s policy-setting group, said after a two-day meeting it decided to move the expiration of its $300 billion Treasury purchase program to October from September.

The Fed’s buying of U.S. government debt has been the pillar of its quantitative easing policy aimed at trimming long-term interest rates in an effort to end the worst U.S. downturn in 70 years.

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