QuoteIn our last article, QE Is Coming (https://realinvestmentadvice.com/resources/blog/qe-is-coming-the-2008-roots-of-fed-dominance/), we focused on why the capital and financial markets have become so dependent on the Fed for liquidity. The article explains that, in the aftermath of the crisis, a slew of regulations drastically changed the liquidity landscape. As a result, the Fed—not the private market—is now the primary provider of liquidity.
A reader asked us the following:
"Can you provide a list and description of the liquidity tools in the Fed's toolbox?"
We like the idea. Given the importance of liquidity to financial market performance, it is crucial to understand not only who supplies liquidity but also how they do so.
Let's walk through the Fed's balance sheet and gain a better appreciation for its toolbox.
Link: https://www.zerohedge.com/markets/how-fed-deals-liquidity-monetary-toolbox