ECB second giant to taper. Bank of Japan already ended QE. Bank of Canada shed 15% of assets. UK, Australia are tapering. New Zealand quit cold turkey
“We need lower consumer demand to give supply chains time to catch up… recover efficiency… and break this vicious circle”: CEO of Maersk’s APM Terminals, one of the largest container port operators.
The Fed will trim back its stimulus, but it’s already too late, and it’ll be too little and too slow.
A burning question in these crazy times.
And as the Fed pumps out cash via QE on one side, it mops up $1 trillion in cash via reverse repos on the other.
Giving political cover to the Fed to tamp down on inflation. Which fits neatly into my theory.
This combo of massive QE, repressed interest rates, huge government stimulus with borrowed money, and raging inflation is new in recent history.
Repos are different from QE; they’re in-and-out transactions that don’t endlessly pile up, unlike QE.
Why is the Fed so far behind the curve? Other central banks are now making room for “persistent” inflation.
Disruptions “might linger for longer and might have larger or more persistent effects on prices and wages than they currently assumed.”