How do asset purchases increase the size of the Fed’s balance sheet? And how would reducing reinvestments reduce the size of the balance sheet? In this post, we answer these questions by describing the mechanics of the Fed’s balance sheet. In our next post, we will describe the balance sheet mechanics with respect to agency mortgage-backed securities (MBS).FRBNY — Liberty Street Economics
We start by describing simplified balance sheets for the Fed, the Treasury, the banking sector, and the nonbank public.
How the Fed Changes the Size of Its Balance Sheet
Deborah Leonard, Antoine Martin, and Simon Potter
3 comments:
Another great text from the FRBNY economists. Very clear description of Fed operations, including the accounting tables.
Let's wait for the next part on the purchase of agency MBS.
No Dealers involved?
No mention of effect on bank regulatory ratios.... i.e. Cause of GFC...
Also, left out the part showing how this is supposed to help the economy....
Jose, this paper is sophomoric.....
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