Yield of 0% a First at 3-Month Treasury-Bill Sale
wsj.com
wsj.com
It's a strange market given that the federal government is on both sides of the equation.
The bank presents itself as part of the US government to the public and many make the mistake of thinking that it is. The only perview the US government has over the Fed is a presidential appointee in the form of the Chairman. Try doing a freedom of information request on the Fed and you will be refused on the basis that it is not a federal agency! Hardly what I would call full transparency and accountability.
Today's Fed didn't just come about. Several times over history bankers used their power and influence to create this system but faced opposition from great patriot politicians.
Consider this quote:
“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered…. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” – Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)
Another example is President Andrew Jackson, who considered 'killing' the 2nd Bank of the US (an earlier type of the Federal Reserve System) his most important legacy.
And finally, Woodrow Wilson the man who damned us all by signing the 1913 Federal Reserve Act, a few years later wrote:
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.”
http://www.federalreserve.gov/newsevents/press/other/2015010...
I.e., they are paying the Treasury with money they received from the Treasury, or from bonds guaranteed by the Treasury.
The fact that the most recent sale of bills was at 0% doesn't actually mean that there is no risk of the government defaulting on existing debt. Because the cost of borrowing is so low, one might think it should mean that, but the nature of the legal rules -- particularly, the debt ceiling -- means that a politically-driven default with no need is still a real possibility.
It could actively decide to default, but hitting the debt cap would likely just force a government shutdown due to cash flow issues unless the cash flow problems got insanely bad.
In any case, it'd be yet another time that the Republican-led Congress ceded power voluntarily to the President. If Congress wants to lead this country, they better start leading. (IE: Writing laws and getting us out of these self-made problems)
I'm willing to listen to anyone who thinks they have a solution for getting us out of this "rolling debt" system, but unless you can solve both problems simultaneously, it will be better to just raise the debt ceiling and then start fixing the issue.
At that point masterleep's comment is not quite so far out as you claim it is. On the surface, it's wrong, and yet in terms of the long-term dynamics that never actually get addressed, there's a definite point there.
Republicans have had control of the House since 2012, and a majority of the Senate since 2014. They haven't even passed a real budget (not this Continuing Resolution crap).
"Starve The Beast" has already been tried: https://en.wikipedia.org/wiki/Starve_the_beast
All that happens, is that more debt gets borrowed. How about actually passing a budget and telling the American people what services get cut? How about raising taxes for once? The US got out of its last major debt (ie: World War 2) by raising taxes on the highest bracket to 91%, and holding it there from 1940s through 1964.
http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
If you don't got the courage to cut programs, then raise taxes. If you don't got the courage to do anything, then GTFO out Congress so that real decision makers can get in and actually try and solve the issue.
How do you solve the budget issue? You do it by cutting spending, or raising revenue. Or a combination of both. Period. There's no way around it.
The Debt Ceiling itself doesn't do jack diddly. And it has lost its effectiveness as a bargaining point in this new do-nothing Congress. Its time we get rid of the Debt Ceiling and just focus our debates on actually making the first actual budget for the Federal Government since 2012.
Look, I understand how the House and Senate being split from 2012 through 2014 caused the continuing resolutions of 2013 and 2014 to happen. However, with an entire year with BOTH houses under control of the Repubs, you'd expect them to actually get a budget to Obama by now.
This is misleading. The effective tax rates were roughly the same then as now - very, very few people paid those high rates. Instead a lot of effort went into hiding income, getting tax deductions made into law, getting compensation in forms other than taxable income, etc . (For example, this is why employer paid for health insurance came about.) There were people who weren't able to avoid the high rates, but it was a tiny percentage of revenue. These high rates distorted economic activity (and surely stopped some economic activity that would have happened).
The reason the US got out of WW II debt is that federal spending dropped dramatically after WW II and the US had the advantage of being the major industrialized country that wasn't attacked in WW II.
An intro to the topic: http://www.manhattan-institute.org/html/ib_19.htm#.VhShIIShb...
Preventing the government from increasing its total quantity of debt when such is necessary in the short-term to meet debt service payments is, absolutely, creating default.
It may be motivated by desire to avoid a speculative potential future default on a larger debt, but its still a default now.
For years now people have been alleging that the Fed via the FOMC and other mechanisms has been propping up the treasury market by buying them directly... an effective strategy to keep interest rates low, which will work really well... until it doesn't.
When the market signals are distorted to such a degree, the damage to the economy is cumulative. It may not cause an impact now, but it will eventually.
This is a lot like the causes of the housing bubble (which were in part due to artificially low interest rates.)
Quantitative easing is economic heroin... it makes things feel great for awhile, but the price to be paid on the downside gets heavier every year.
We should have let the banks fail, and the economy work out the repercussions and get healthy.
As an alternative to buying treasuries, you could use a bank, but keep in mind that FDIC only covers accounts up to $250k and beyond that, you're exposed to the bank's credit risk, admittedly small, but a very large concern for an individual/company with millions in cash. Banks don't work the same way for big accounts as small ones, you actually have to weigh things like "will my money be available" and "will the bank default".
If the situation gets bad enough, people will start warehousing cash in bunkers, but that's expensive and I highly doubt it could be done for less than 0.05%/year or whatever slightly negative rate the yield is on these things.
Banks provide a valuable service by offering depository safekeeping of funds. If we stay in this zero-interest environment much longer, expect to see more fees on checking accounts as net interest margin (what the banks earn between their borrowing costs and their lending prices) continues to fall.
Unfathomable to me having so much money that you need literal warehouses for it, but even more amazing is that there was no alternative besides a 10% year over year loss on your stored capital. When you're talking about a cartel that was bringing in roughly $22Bn a year (also Wikipedia) that amounts to roughly $2.2Bn a year sunk to rats.
So, in retrospect, if you can do it legally, the Fed's bills seem like a great deal compared to stockpiling cash. And I'm sure you're paying far less to secure those, although I'm not exactly sure how these treasuries work and if you could just purchase one worth $22Bn and put it in a safe somewhere. Seems like it'd be just about impossible to steal something like that and pass it off as your own.
[0] - https://en.wikipedia.org/wiki/Pablo_Escobar#cite_note-accoun...
10% annual loss on the warehouse-stored amount does not mean 10% loss of annual income. Some of that annual income is getting turned into non-cash assets, after all.
Its talked about in Europe with the ECB using negative interest rates to (unsuccessfully) stoke their economies.
http://www.economist.com/news/finance-and-economics/21644203...
http://www.bloomberg.com/news/articles/2015-04-23/negative-i...
If the Treasury default risk is smaller than the alternative expected costs for alternative storage of the same dollars (either bank failure risk or, for instance, cost to store and risk of loss of physical bills), then there can be an advantage to 0-interest treasury securities. There is no risk and cost free way to store dollars.
If you don't want to give the money to the treasury where else do you put it? Your options are probably under your mattress or in a bank. Any bank has higher default percentage than the treasury.
I'm not sure what is distorted or artificial about what the FED does. They try to stabilize the growth of the money supply so that we have near constant inflation, and full unemployment. If the Fed were to keep rates artificially low we would see inflation, if they kept them artificially high we would see unemployment. Right now because of the zero lower bound we are seeing much more of the latter than the former.
I just don't see a currency working as a unit of account or store of wealth with such oscillation in value. Maybe as a medium of exchange, but then you're making every transaction cross an FX exchange (btc/usd) and I doubt that's possible at scale for less than what a scaled payment network (e.g. Visa) charges.
Bitcoin is already cheaper as a medium of exchange than credit cards and pretty much all international remittance providers.
Coinbase Exchange has a $0.01-$0.02 spread and charges 0.25% for removing liquidity.
Stripe costs 3% + $0.30 and Western Union / Wire Transfers are multiples of that.
Disclosure: I work for Coinbase
Stripe is an expensive acquirer. I'm working with Heartland and we're getting a hair over 2.1%. I suspect this is going to fall even farther as EMV gains wide acceptance and skimming/other forms of fraud become a thing of the past.
I'll admit, that's a tighter market than I thought (CB exchange) but I'm still having a hard time seeing how those economics work long-term without tons of VC. You'd have to get below 2% on an ongoing basis and with all the fraud/rewards/other stuff cards provide, 2% still seems cheap.
2.1% isn't your whole acquisition cost. You will have to eat the inevitable chargebacks and associated fees too (which is not an issue with Bitcoin).
> You'd have to get below 2% on an ongoing basis
I'm not sure what you mean by this. We've never charged more than 1% for merchant processing and I doubt we ever will.
> with all the fraud/rewards/other stuff cards provide, 2% still seems cheap.
Why would I use my 1% cashback credit card at a trusted merchant when I can get a 2% rebate from the merchant instead? I'm not alone in this thinking, many Americans choose the 'cash price' when pumping gas every day.
You make some good points about cash back and gas, but you can't deny there's value in the extra layer of protection between you and the merchant provided by the credit card. I don't know whether it's worth 1%, but it's not worth zero. BTC payment is more like handing a stack of notes, not payment via card.
That's how transaction costs are so low.
I bought and sold bitcoin and paid for things with bitcoin, but the associated paperwork to account for the gains and losses incurred by the inherently fluctuating price was onerous.
I believe in the premise of bitcoin, and still own some, but it's way easier to pull out my credit card to buy a cheeseburger than it is to use bitcoin and then compute the capital gains tax owed on my cheeseburger the following spring.
You can already hold USD at Coinbase and send USD to BTC addresses with an on-the-fly conversion (although it will run you 1% today). Or conversely, generate a BTC address for your USD wallet and have all incoming BTC converted on-the-fly (also 1%).
For a local cheeseburger in your own country it's never going to make sense to use Bitcoin but there are plenty of other applications where it already makes a lot of sense (remittances, online purchases, goods and services with a high risk of payment fraud, etc.)
With the fall of the Soviet Union as a guide for crumbling monetary systems/empires, guns and food are nice to have around, but the best currencies by far are vodka, cigarettes, and other drugs. The are portable, liquid (heh) assets that are useful in barter and also (crucially) prized as bribes by the groups of armed men, in or out of uniform, who will make or break your survival strategy. You can always trade drugs for food but hardly ever the other way around.
My favorite Vietnam-era strongman, General Tuan Shi-Wen, said it best:
"... an army must have guns, and to buy guns you must have money. In these mountains, the only money is opium." [0]
And very few people have the size mattress necessary to store the kind of money that anyone making noticeable investment in T-bills is trying to store.
It seems disingenuous of the government to continue their claim of low inflation. I understand that their basket of goods used for measurement can't be perfect, but it appears that it is gamed quite a bit.
Substituting ground chuck for steak, or using technological increases (e.g. CPU speeds) as criteria is blatantly misleading. But the biggies aren't even taken into account. Rent and home prices have gone exponential in many areas, health care and tuition prices go up about 10% / year, property tax rates are pushed up, road tolls added, red light cameras installed, etc.
So I guess if you're a 65 year old on medicare and social security, with a long-ago paid off mortgage tied to a legally fixed property tax (e.g California) and no commuting and child-care expenses, the fact that the price of eggs or Frosted Flakes hasn't increased in the last year might support an argument for low inflation.
Not so much if you're of working age and still dealing with school loans, rent / home prices, commuting, etc.
What do you think could be driving the acceleration of inflation you mention? The mainstream story is inflation is driven by wage gains when the economy starts to overheat. This increase in wages is then passed onto the consumer, who to afford the increased prices asks for a wage increase and the cycle continues. I don't know think there is currently a general overabundance of jobs in the U.S. economy driving large wage increases.
For individuals, treasuries offer better yields than CDs and treasurydirect.gov makes it very easy to buy and sell them.
This is probably a really good time to invest in developing world junk bonds.
See: Trying to treat municipal bonds as high quality liquid assets (vs. illiquid for holding purposes).
I agree that there are required levels of prudence in banking and investment management more generally, but don't pretend there's a well-defined brightline between "gambling", "speculation" and "investment".
Developing is a risky bet. Commodities are down across the board and most of these developing nations depend on them for revenue.
Also the bonds either has to be in USD or you could get screwed due to the strength of the dollar.
FYI bank deposits are insured by the FDIC up to 250k.
Also governments rarely default on bills (1 year or less maturity) only on longer dated bonds (over a year), for slightly unclear reasons.
http://www.wsj.com/articles/switzerland-first-with-10-year-b...
As the U.S. government has been spending the free money it is generating from bond sales, and as a consequence consuming and investing resources and capital in a sub-optimal manner, you see what's exactly has been occurring, U.S. % of population in the labor force is dropping precipitously, corporations borrowing the free money for share buybacks instead of investing it (there are too few investment opportunities available because resources & capital is being soaked up by government spending). As a result the U.S. economy is anaemic enough the U.S. Fed isn't confident enough to raise rates by a mere 0.25%, 7 years after the 2008 financial crisis.
“That’s why I often said that monetary policy was not a panacea — we needed Congress to do its part. After the crisis calmed, that help was not forthcoming. When the recovery predictably failed to lift all boats, the Fed often, I believe unfairly, took the criticism.” - Ben Bernanke
http://www.ft.com/intl/cms/s/0/b1d44a48-6b71-11e5-8171-ba196...
It does not follow that borrowing cheaply today reduces private spending today (expanding credit = more $ in circulation). It creates future tax obligations, but this is offset by growth in the economy. Growth happens because the government's spending is income to businesses, which increases tax revenues. As this gets spent and re-spent, it creates a virtuous cycle that expands the economy.
It does not follow that borrowing cheaply today reduces private spending today
Correct, it increases spending today, and reduces it in the future. The "growth in the economy" will be lost when credit must inevitably contract again. expanding credit = more $ in circulation, more goods will be consumed, less goods in market, less goods invested in the long run. Government's spending is income to businesses, which increases tax revenues. As this gets spent and re-spent and invested, it leads to over-investment for a short period of time, because businesses re-invest the income to produce goods, and the government is unable to increase their spending exponentially to consume those goods without raising taxes. The government must eventually repay the debt it has borrowed, and by forcing interest rates down to reduce its obligations, the income to the private sector from investment in government bonds is reduced. Private sector income is further reduced by expansion of taxation. The reduced income meaning less $ is available to purchase the increased goods that came from the increased government spending, causing temporary deflation that you see today. Expanding available credit to subprime borrowers is the last gasp of the economy trying to keep the expansion of credit before contraction over takes and economic decline returns to the economy[1].
So far the data works out. Labor participation dropping, private investment & private consumption going down, deflation widespread.
Lower savings rate = lower long term economic growth. Keeping interest rate near zero had the effect of temporarily holding the GFC back, but is now going to cause economic malaise in the American economy.[2]
[1] http://www.bloomberg.com/news/articles/2015-10-06/meet-fortr...
[2] https://en.wikipedia.org/wiki/Solow–Swan_model
EDIT: tcbawo: I like to see cutting government consumption to increase government investment expenditure. I don't agree with cutting government investment either. Iceland is the only country so far to do what I'd like to see governments doing, and is the only country to have recovered to pre-2007 growth. As a reply to RobertoG: Yeah, I hope I'm wrong because what I'm saying is there's no free lunch. We'll see how long it takes U.S. economy to completely recover, I doubt it will recover for the common person within the next two to five decades, but maybe I'm wrong and there's hope.
https://modernmoney.wordpress.com/2010/09/20/the-myth-of-cro...
Anyway, you say "businesses re-invest the income to produce goods" that is not always true as we can see at this moment. They just hoard the money.
And "Private sector income is further reduced by expansion of taxation", but expansion of taxation is not necessary if the economy is not overheated and the people in charge understand what a public deficit really is.
Also, ut's not clear what you mean by "the data works out". Deficit spending (or national debt hysteria) hardly began with the most recent financial crisis. Demographics are shifting as baby-boomers retire. The vast majority of countries that cut spending in the downturn have lost more in GDP than they gained in debt reduction.
Yet, your point of view still appears to drive policy in Europe and is a factor in US policy. Let the beatings continue until morale improves...
Will it happen? No.
What will happen is the U.S. national debt will grow so large, the cans receive a few more dozens of kicks, the "emperor is naked" fable finally comes into play, U.S. will eventually declare bankruptcy, and force to cut its bureaucracy to the bone. The sudden political change will increase political instability in the U.S., and the government may or may not survive, and no matter what happens, a U.S. state will rebuild, starting with expanding the government through investment in public infrastructure, to justify concentrating political power in its hands once again.
But that's another two to five decades away. It will happen no matter what you or I say.
I would like to inform you I am in fact Chinese (living in Australia), and I save 80% of my income for my retirement, and invest in myself. You can blame your government for operating in a way to cause the Fed to lower the interest rate to zero, so that everyone borrows to consume and no one likes to save anymore.
I put away 80% of my income every month to invest in Australia's economy. How much do you save and invest in yourself and your country? As the saying goes, to take care of the world, first take care of your country. To take care of the country, first take care of your family, and to take care of your family, first take care of yourself.[1]
[1] https://books.google.com.au/books?id=jSXjAQAAQBAJ&lpg=PA89&o...
The government could in fact profitably invest a bunch of money in infrastructure. The problem is that the government invests, not where investment is needed, but instead where Congress politically decides to invest money. The results tend to be... sub-optimal.
Is this a good opportunity for the government to invest in needed infrastructure? Yes, definitely. Is it a good opportunity for Congress to decide to spend a bunch more money? Not in my book.
Money borrowed at a negative real rate isn't free, of course, but it is on sale. If we have a billion dollar project that needs to be done, you could save ~five million by spending the money today and paying for it three months from now.
Government isn't going to boost the economy at this point, unless you're advocating WWIII.
If the US decided to reduce its fiscal deficit, wouldn't that take short-term T-bills out of circulation and drive down interest rates further?
So short-term, it would not affect rates, but long term budget surpluses are worrisome.
To the parent's question: If such were to happen, they're at least as likely to pay back longer-term debt.
Because with a bank account you have the risk of bank failure and the risk of the currency failing, with a T-Bill you basically eliminate the first of those risks. [1]
For the vast majority of people, the former risk is pretty fully mitigated (to the extent that it is separate from the latter risk) by deposit insurance, but that has an upper limit.
[1] Not fully, because its theoretically possible that the government could selectively repudiate some of its debts without the currency collapsing, so there is a potential failure that remains distinct from currency collapse.
[0] http://finance.yahoo.com/news/france-sells-bonds-negative-in...
[1] http://money.cnn.com/2015/02/25/investing/germany-negative-b...
"The Wall Street Journal reported in early December that J.P. Morgan and several other banks, including Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp., had spoken privately with clients in recent months that new regulations are making some deposits less profitable, in some cases telling clients they would charge fees or work to find alternatives for some of the deposits."
Or corporations, or pension funds, or mutual funds, or whoever needs to park a lot of cash for a short amount of time. If your $20b pension fund wants to keep a 5% cash position they need to store that $1b somewhere and it would be a risk to keep it in a bank account (the bank may default).
The FDIC's target is two business days from the failure of the bank. [0] IIRC, though, most actual bank failures have resulted in a different FDIC-insured bank taking over all or virtually all deposits, so while bank failures happen all the time, FDIC insurance payouts rarely need to occur.
[0] https://www.fdic.gov/consumers/banking/facts/payment.html
says "When there is no open bank acquirer for the deposits, the FDIC will pay the depositor directly by check up to the insured balance in each account. Such payments usually begin within a few days after the bank closing."
You're looking for "personnel" here.
I guess people can't figure out how to make money from these zero-interest loans.
As someone with a mortgage, I would really like to see some inflation (well, wage inflation anyway).
5-Year Breakeven Inflation Rate https://research.stlouisfed.org/fred2/series/T5YIE
10-Year Breakeven Inflation Rate https://research.stlouisfed.org/fred2/series/T10YIE
What this does indicate is that the fed is buying treasuries directly to keep interest rates low. They don't care about return, but are simply going to provide enough demand to keep all treasuries the government wants to issue snapped up... so interest rates don't rise.
I doubt they meant to hit %0, and probably just over bought a bit.
If you're worried about getting repaid or you're desperate to get your cash out of whatever it's currently in and into something safe and liquid then short term treasuries are probably your answer. But like I said I don't know if that applies to auctions like this, auctions are not the same as the general market so it may just be a fluke.
There is an advantage to 0% short term debt vs cash. If you have a lot of park somewhere you can't simply put it in a savings account. FDIC protection only goes so far if your bank of choice goes belly up. So what are your choices? Well you can buy commercial paper for a while but after certain amounts that market dries up too (because there simply isn't enough of high quality commercial issuers). Treasuries are available in gargantuan quantities, are highly liquid, and assumed to be risk free.
>What this does indicate is that the fed is buying treasuries directly to keep interest rates low.
That's not really true these days. There was some of this going on up to the last round of quantitative easing but since then the levels held really steady: https://research.stlouisfed.org/fred2/series/TREAST The fed really isn't a big player on UST auctions these days.
Parking cash with US Treasury is substantially safer.
There are no unsophisticated buyers in a Treasury auction. Whoever bought at 0% certainly meant to buy at 0%.
Given that the fed claims that QE is over (no more purchases, and existing bonds being retired when they mature), I'd like to hear any evidence that you have that shows that the fed is still buying. (And, in case you were going to go there, "because the interest rate is zero, duh!" is not evidence.)
Demographics has had a downward trend on the interest rate but that is about to change as there will be a shortage of labour.
It´s summarized in this article http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...
Yes.
> What's to stop a bank from just "borrowing" trillions or even zillions?
The yield is on Treasury bills -- that is, US government debt. What's to stop a bank from borrowing anything at that rate is that the market doesn't see banks as safe enough to give them that kind of rate; the US government is a different story.
What limits the government's ability to borrow is that the rate is set based on the market-clearing price; if the government tried to issue more debt, that would increase the overall interest rate it would have to pay. (You can look at that as "raising" the price if it tries to "buy" more money, or "lowering" the price if it tries to "sell" more claims for future payment; but it works out the same either way.)
Banks don't get this zero percent rate. And the government itself can't get a zero percent rate for unlimited amounts, even if the debt ceiling weren't a thing; eventually the Fed's line up of lenders runs out of people willing to lend at zero percent interest.
On the one hand there we see very strong demand for safe assets: Short term treasury bills are safe because a) risk increases w/ time period and b) they are backed by the US gov't which has a great credit rating and a decent economy to keep it solvent. Investors are willing to take moderate losses (-0.02%) on 3-month T-bills on the secondary market. They are literally paying the government for the reassurance that they will get 99.98% of their money back in 3 months.
On the other hand, we are seeing very strong demand for risky assets: S&P 500 was at 2,120 in July, and has lost ~120 points since then but is still 400 points above it's pre-recession 2007 high of 1,560. "Some money managers say the global monetary-policy backdrop is supportive of riskier assets, many of which have become attractive after a selloff in the third quarter."
It seems like the supply of money is much too high, and there is not enough demand (viable short-term investments) to soak up the supply.
Perhaps if our economy was not so short-term greedy and consumption-driven, we would not be so worried about a few years of necessary savings and long-term investment which would lead to non/negative ROI in the short term, but long-term growth if done correctly.
The funny thing is that both the US stock market and the US government bond market, while on opposite sides of the risk spectrum, are both powered by the same engine: the US economy -> US corporations -> US employees -> US education/nutrition/social services/infrastructure/defense. If this engine sputters, all investors will be in a world of pain - bond holders less so, unless the entire system collapses and their bonds become worthless.
As the article states, investors are basically giving the government short-term loans when they purchase these T-bills. They have faith that the government will be able to earn some return on them (usually below corporate returns, and hence lower than stock-market interest rates), but that the government has some plan to generate returns nonetheless. So the government should be taking these loans and pumping them into the economy in the way that free market capitalism can't - long-term investments in the basic infrastructure of society.
Instead the government continues to keep the liquidity taps open through QE as central banks around the world forge onward with massive asset purchases, putting more money into the corporate market while rotting government balance sheets.
Summary: It's like the public and private sector are playing hot potato with an increasing number of hot potatoes. The private market does not want to forego short-term profits and is expecting the government to make the proper investments to spur growth. The government has its hands tied with social security, medicare, and defense spending as well as the debt ceiling, and is pumping money out to the banks with the hope that they will fund long-term investment. They keep going back and forth, swapping more and more money, but the only thing that happens is the distortion of free market prices and signals.
Why not just hold on to the money, and have 100% of it in 3 months?