The latest Federal Reserve report still does not show signs of the “tapering” of quantitative easing (QE) which is supposed to have been executed according to Federal Reserve Open Market Committee (FOMC) meeting reports since Nov. 2, 2021. There is still less sign of the “quantitative tightening” and “rate hikes” which the Fed is alleged in every media account to be carrying out in order to “control inflation.”
Given that the so-called QE Infinity has had the Fed purchasing $120 billion in Treasury and MBS securities since May 2020—when it slowed down to that rate after its March-April 2020 frenzy—simple math would say that the Federal Reserve’s holdings of securities, bought from big banks to give them a flood of new reserves, would have been increasing by about $1.45 trillion in a year, including the year from January 2021 to January 2022.
But since the Fed’s “taper” announcement on Nov. 2, 2021 said it would reduce those purchases to $150 billion in December and January combined, the year from the end of January 2021 to the end of January 2022 should have seen the Fed’s security holdings grow by only about $1.36-$1.37 trillion. But not so, not even close. The Fed’s latest “Factors Affecting Reserve Balances” report, as at Feb. 3—the end of the week straddling January and February—shows that the Fed’s holdings of Treasuries and MBS are actually up by $1.55 trillion since the same date one year ago. That’s $190 billion more than one would have expected if the Fed had “tapered.” Those holdings now stand at about $8.92 trillion, neck and neck with the European Central Bank.
