Some important distinctions and nuances made here, and I would agree that if this is a temporary measure then it's not QE. However to play devil's advocate, I think about QE as growth of the Fed's balance sheet greater than trend of GDP and (as you say) non-interest bearing liabilities since the LSAPs (whether bonds, FX in China's case, or equities in SNB's case) need to be funded with reserve liabilities. To the extent new bills under RMP keep the balance sheet elevated, then i would argue it is QE as it keeps the balance sheet size from prior rounds elevated relative to trend, to which QT was normalizing. It could be to alleviate funding stress and TGA growth for tax season as the Fed is laser-focused on these spikes, but there is the risk that it becomes ongoing.
Superb clarification of the stabilizer vs stimulus distinction. The tipping point framework is really useful tho, especially the observation that RMP morphs into actual QE if organic reserve demand slows but the Fed keeps buying at $40B/month. That dynamic creates an assymetric risk where markets price in permanence even when the Fed frames it as temporary plumbing maintainance. Gonna be interesting to watch wheter they scale back post-tax season or let it quietly morph into somthing bigger.
I heard the metal of the printer crank last night. It sounded awfully familiar. I swear I could’ve heard it echo “Q…. E….”
Some important distinctions and nuances made here, and I would agree that if this is a temporary measure then it's not QE. However to play devil's advocate, I think about QE as growth of the Fed's balance sheet greater than trend of GDP and (as you say) non-interest bearing liabilities since the LSAPs (whether bonds, FX in China's case, or equities in SNB's case) need to be funded with reserve liabilities. To the extent new bills under RMP keep the balance sheet elevated, then i would argue it is QE as it keeps the balance sheet size from prior rounds elevated relative to trend, to which QT was normalizing. It could be to alleviate funding stress and TGA growth for tax season as the Fed is laser-focused on these spikes, but there is the risk that it becomes ongoing.
Superb clarification of the stabilizer vs stimulus distinction. The tipping point framework is really useful tho, especially the observation that RMP morphs into actual QE if organic reserve demand slows but the Fed keeps buying at $40B/month. That dynamic creates an assymetric risk where markets price in permanence even when the Fed frames it as temporary plumbing maintainance. Gonna be interesting to watch wheter they scale back post-tax season or let it quietly morph into somthing bigger.