"If money isn't loosened up, this sucker could go down" - George W. Bush warned in September 2008

Wednesday, February 24, 2010

WTF?!?! QE R.I.P.

Treasury announcement:

"Treasury anticipates that the balance in the Treasury's Supplementary Financing Account will increase from its current level of $5 billion to $200 billion. This will restore the SFP back to the level maintained between February and September 2009."

This is a de facto end of quantitative easing in the USA. The remaining bit of QE in March will be sterilized by the Treasury. Who could have guessed that Obama administration wants to tighten monetary policy? The fig leaf is provided by WSJ:

"The intention always was to resume SFP issuance when the debt ceiling was increased on a permanent basis, which finally happened earlier this month,” said Lou Crandall, a money market analyst at Wrightson ICAP LLC. “The Treasury kept $5 billion of SFP bills outstanding throughout all the debt limit negotiations as a placeholder to indicate that it wanted to go back to the status quo ante."

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