Where's The Beef?
Note to Millenials. You don't get this reference, so go enjoy this funny commercial:
Didn't The Fed Print Dollars To Fund The Government In 2020?
There is a strong narrative that the Federal Reserve bought more than enough Treasury bills, bonds and notes to fund the government in 2020.
In reality, while the Fed bought $3.2 Trillion in assets in 2020, the Treasury issued $4.5 Trillion in securities to the marketplace.
As gigantic as these numbers seem, since 2011 US Government has increased the national debt by an average of $1.36 trillion/year, with the Fed buying an average of $488 billion/year. Perhaps this is where the Fed came up with their $120 billion/month Quantitative Easing target; they are trying to evenly monetize the normal deficit spending of the Federal government for the time being. The simple reason inflation is low is that the Federal Reserve is not compensating for the cash the US Treasury is sucking from the economy.
In March, we will have an interesting period when the US Treasury lowers their targeted borrowing by ~$1 trillion to reduce excess cash holdings. This type of large scale change in government funding has never happened before. Grab some popcorn boys and girls, this should be interesting.
Robert Lloyds, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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