I’ve been harping on this for months now and it looks like the message is getting across just in time.  Yes, just in time for the end of QE2.  As I mentioned over 6 months ago, QE2 is a monetary non-event.  It adds not one penny of extra liquidity or money to the banking system.  And it looks like Wall Street is finally beginning to realize this (as the evidence now clearly shows).  This note from Deutsche Bank describes (in retrospect), what I discussed back in August 2010 (courtesy of FT Alphaville):

“The $2 trillion in purchases have literally gone down a black hole. Required reserves haven’t been required to increase and the Fed reserve add has literally simply been hoarded as cash. Excess reserves at the Fed have subsequently soared by the same. In short, QE has been a spectacular disappointment in its impact on bank lending, whether via whole loans or securities. It was as if the banks conducted the very sterilization of QE that many thought perhaps the Fed should do to “contain” inflation expectations.

Risky security prices have risen since QE but not Treasuries, the main instrument of QE2. Yet banks’ balance sheets have gone sideways. Effectively investors have marked asset prices higher and circumvented the banks. It is as if the first purchase by the Fed from an investor simply triggered a series of deposit for security switches through the investor base with banks never making an additional loan. This is consistent with a greater concern for risky asset post QE2 end, than Treasuries. The danger for investors is that they confuse the result of higher asset prices as reflecting excess liquidity rather than “irrational” exuberance given that actual liquidity (as broadly defined by the banking system) hasn’t gone up at all.

For all the worries about the end of QE2, the focus should be on how we came about the “risk on” trade and elevated asset prices. It was not through revitalized bank lending. There is no banking system that is standing on its own two feet and propelling growth forward. It remains like a herd of deer in the headlights – ready to hand the cash straight back to the Fed when asked for. If risky asset prices were elevated because of the expectation of a kick start from the banks, they are at risk of falling. Treasuries are immune because no one could buy them as the Fed purchased them. There is no call on loans that funded Treasury positions through QE2. Moreover if the banks slowed the pace of deleveraging (deposit destruction) because of the safety of their cash hoard, there is a risk that they may become even more recalcitrant.”

I should add that there does appear to be an increase in lending in one area – the borrowing of funds for purposes of speculative investments! Other than that, this note sounds all too familiar.  Never in the history of markets has there been a program more misguided or misunderstood….

Source: FT Alphaville


Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

More Posts - Website

Follow Me:

  • John

    So, the Fed was able to engineer a reflation of commodities, precious metals, and stocks–and support Treasury prices–without actually putting more money into the economy? Is that correct? They knew that the consumer had reached the end of the debt line and therefore did not have the capacity to drive inflation. So the Fed gave the money to the banks and other institutions to create inflation through the back door? I mean, the result (stagflation) is worse than if we had actual jobs/consumer driven inflation, because in that case, at least the inflation would be the result of actual economic growth. Not some financial shenanigans. Cullen, do I understand this basically correctly?

  • http://www.3spoken.co.uk Neil Wilson

    What’s really interesting is that all this buy back of bonds was supposed to cause a load of spending on taxable stuff like yachts and the like by private sector non-financial entities.

    That doesn’t appear to have happened either.

  • Non_Economist_Fortunately

    asset swap, hehe …, a static view of the dynamic system, like a frog in a well, the sky is only as big as the size of the well. Oh well …

  • John

    The middle class is tapped out, so the rich were supposed spend more to support the economy?

  • http://www.pragcap.com Cullen Roche

    It’s important to note that the asset reflation does appear to have some fundamental backing. Remember, this rally all started at very depressed levels when double dip was largely expected. Then we reported an August ISM of 57, global PMIs were all strong and the blip of 500K+ claims in August was just that – a blip. The data improved dramatically and double dip came off the table. So, there is a component of rational pricing here. But there is also a component of irrational pricing as investors have become fooled into believing that QE would spark some new round of out of control inflation. So, we get people hoarding commodities and the nightly news fretting about “money printing” and “debt monetization”, etc. The psychological impacts have been broad. What hasn’t occurred is some explosion in the money supply…

  • http://www.pragcap.com Cullen Roche

    I am still waiting for you to admit that I was right :-)

  • LVG


    Thanks for your hard work on QE and explaining things that few people seem to understand. Does it frighten you that so few people (including those in the Fed) understand all of this? It looks like Ben Bernanke just took a shot in the dark with QE without knowing what the result would be. Thanks.

  • prescient11

    Would BB just go ahead and buy corporates already so we can get this show on the road!!!

  • http://www.pragcap.com Cullen Roche

    It’s damn frightening. I think an objective conclusion regarding QE shows that it did little other than increase speculation in markets. This is the same old sort of policy we’ve been trying for 25 years. If it helps Wall Street then the Fed is convinced it’s good for everyone. It’s so backwards it makes me sick.

  • Dimm

    But if the rich spent their money they won’t be rich anymore ;)
    Wealth effect was DOA.

  • BOC

    I couldn’t agree more.

  • John

    Sure, my argument was an oversimplification, but essentially correct, I guess. The thing that has worried me about the Fed’s policies during this crisis is that we are getting the results of inflation without the prerequisite growth. In other words stagflation. I have mentioned this before on another comment, that, unless real growth returns in a big way, whether we get nominally higher prices due to monetary inflation, or nominally lower prices due to deflation, affordability and thus the standard of living of the average consumer will go down because real costs will go up (thanks to a large degree because global competition). IMO this is one type of key fundamental backing.


    Cullen, you left out one other benefit of QE. We taxpayers shored up bank balance sheets so dividend payments could commence. And, the cycle will start again..

  • kman

    So Cullen, whats the Fed’s next move then ???

  • Helix12

    And now for the grand finale…the Fed will have to increase overnight rates and stop POMO to stave off dollar falling below support, sparking massive inflation including rising oil prices leading world into double dip. Snap back of dollar will wreak havoc on the stock market. Bankster is now checkmated. Alas the beloved stock market rally will have to go first to avoid an even worse calamity! Anyone for shorting?

  • Zebra


  • wh10

    Funny thing is the person writing the FT Alphaville piece STILL doesn’t get it, as evidenced by his whole intro scenario, which is fundamentally misguided. But apparently if Deutsche bank says it, then all the naysayers who would have said you are wrong now arbitrarily believe it is right. Must frustrate you to no end.

  • http://www.pragcap.com Cullen Roche

    With these guys in charge? Whatever helps the banks the most :-)

  • Miningjunkie

    “Ben Barnanke took a shot in the dark with QEII”?

    You have to be joking,right? The “shot” was to rescue the banks’ balance sheets with taxpayer capital and that WAS the “intended consequence”. What wasn’t expected was a surge in raw material (input) costs that failed to reignite housing. The CPI uses housing as an inflation guage so ex-housing, inflation is raging without the intended rebound/recovery in housing. The current trap today us trying to reverse the inflationary explosion without cratering housing even further. I will be an eager observer of the next exrcise as it unfolds. Note: OBSERVER as opposed to PARTICIPANT.

  • LVG

    You’re the only analyst I read who actually seems to understand what is going on. No offense, but it’s pretty frightening to me that you understand this stuff better than the people in charge.

  • jt26

    “The psychological impacts have been broad.”
    I think it is more than psychological. With QEx, the government is saying that 0% interest rates is not low enough … that’s scary in a faith-based system.

    “What hasn’t occurred is some explosion in the money supply…”
    Although I’m at odds with M2 definitions (being a rank amateur!), I think the “money supply” has increased quite a lot if you take into account all gov debt with <5 year maturity, where interest rates have essentially made them cash equivalents. As well, these assets can be repo'd at any time or posted as high quality collateral. One can also say this for Fed forex swap lines.

  • http://www.pragcap.com Cullen Roche

    Even the famed ShadowStats (who predicted hyperinflation THIS year) is showing M3 at a negative YoY rate….http://www.shadowstats.com/alternate_data/money-supply-charts

  • Adam

    It’s not backwards, its doing just what “they” want it to. You have to remember who the puppet and who the master is here.

  • Adam

    or delusion.

  • Adam

    I’m sure Cullen can fill in the blanks here, but the FED can’t rescue a banks balance sheet UNLESS it overpays for the asset. It’s just a swap remember. If the FED is only buying treasuries then its just a swap (unless it is somehow over valued0. But if the FED is swapping junk assets at a price that is greater then its near zero value then yes it is rescuing the banks balance sheet.

  • Oz

    It would be fascinating to talk to Bernanke and find out what he really thinks and knows. Not defending his actions (I believe they have been incredibly reckless), but I sense from the outset his attitude has been “not on my watch!” Greenspan was the same.

    I suspect they know what they’re doing is dangerous, but they don’t want to be remembered in history as the guy who stood by and did nothing – better to be remembered as someone who tried (but failed miserably).

  • http://www.pragcap.com Cullen Roche

    Scares me more. Trust me.

  • http://EUdebtforever.com Thomas Barton, JD

    If QE2 did not actually do anything but boost the stock market psychologically, then why was this psychological boost manifest nearly every week by a low volume grindup and then one or two days of much heavier sell volume downward followed by the same Monday grindup, rinse and repeat ? Also with the top 45 stocks and ETFs providing up to 60% of the continuing rise from March 2009 to today (this is my recollection of a stat I saw twice in the last 4 months on FAST MONEY) how is this manifestation of a mere psychological boost ? I dont visit your site every day but I always thought but could not understand that QE and QE2 were primarily designed to keep the Insolvent Big Five Banks afloat. Thanks for being so consistent in replying to the thoughts and sometimes angry folly of your readers.

  • http://www.pragcap.com Cullen Roche


    What else could it be? There isn’t new money in the system. There isn’t new liquidity. There aren’t lower rates. The only logical explanation is that this program has altered investor expectations.

  • JWG

    Since bank lending is not reserve constrained (as the Fed well knows), why would the Fed think jamming banks full of reserves would prompt them to lend (or borrowers to borrow) in a hugely overleveraged environment? My guess is that those reserves are sitting there as insurance against another Lehman style bank run until the banks reach solvency on a mark to market basis, as compared to the valuation charade they are engaged in now. “Extend and pretend” backed by reserves as insurance, just in case bank insolvency once again “matters”.

  • paul skinner


    You are 100% WRONG. QE2 has been a monetary event and it has added additional dollars to the economy.

    Since the Fed unleashed QE2, it has bought 70% of all Treasuries issued by the US government. This has put newly created dollars into the hands of the government which has spent this cash, thereby increasing the supply of money in the system.

    So, please realise your mistake.

  • http://www.pragcap.com Cullen Roche

    Hi Paul. You’re making the debt monetization argument. I dealt with that here: http://pragcap.com/pomo-flip-matter

    You don’t really believe the govt would have folded up shop and just stopped spending without QE2, do you?

  • Dave Doe

    Given all the above and the Paul Ryan comments on the other thread. What is the best approach the Treasury (not Fed) can take in order to, for lack of a better phrase, balance the economy.

    I am new to the MMT theory so be gentle (I have read the articles).

    Certainly government cannot run deficits of 10% of GDP for any amount of time and not expect inflation through too much money chasing the same amount of goods.

    The whole argument also seems to ignore that Government malinvestment is just as bad as any other (a waste of tax money is hardly justified by an increase in aggregate demand).

  • John

    I tend to look at it this way: even if the money supply is not growing, if the Fed’s monetary policy has the same real world effects as if the money supply was growing, then what difference does it really make? Perhaps the effects are temporary, but aren’t they always?

    By the way, according to ShadowStats the M3 growth rate is still declining, but at a slower rate, and M2 is growing at a faster rate; M1 even faster still. And aside from M3, all other monetary aggregates are growing. M3 is basically flat. The money supply is not shrinking, as some claim. The problem is, under current economic conditions, it should be. Hence, higher asset prices. Make sense?

  • Hans

    But wait everyone, it is time to let Senor Jim Willie (CB) have his valuable input…

    All those caught laughing and smirking, will be removed from class and sent home…


  • Tyler

    Cullen et al.,

    Can we talk about money supply (M1-M3) some more because I am just confused now? The graphs over at shadowstats show that the monetary base, M1, M2 have all increased since QE2. M3 has not increased as you mentioned above. I am looking at the actual dollars indicated in the gray shaded area. The graphs seem to agree with John Hussman’s latest bit:

    “So we can measure the progress of QE2 by calculating the change in the monetary base since QE2 was initiated.
    Monetary Base 11/03/10: $1985.1 billion
    Monetary Base 04/06/11: $2490.3 billion
    QE2 completed based on change in Monetary Base: $505.2 billion”

    What am I not understanding here? Thanks!

  • http://www.pragcap.com Cullen Roche

    We must run deficits until we are confident the b/s recession is over and the consumer is back on stable footing.

    I have spent quite a bit of time discussing malinvestment. Everyone tries to make this political, but I hammered Obama for healthcare, cash for clunkers, housing tax credits, etc.

  • http://www.pragcap.com Cullen Roche

    Sure, the money supply is not shrinking, but it’s most certainly not exploding higher as the inflationists would have you think….

  • http://www.pragcap.com Cullen Roche

    Ignore the base. Banks don’t lend their reserves so the base can explode to a trillion and it won’t matter. We saw this in Japan. Hussman lives in a textbook and not in the real world. Reserves don’t create loans.

    The two broadest measures, M2 and M3 are still well below historical norms. I see nothing to be alarmed about.

  • John

    That’s certainly true. Thanks, Cullen.

  • Paul Skinner

    Hi Cullen,

    Once again, you are 100% wrong. I’ll explain why:

    When the US government spends beyonds its means, it simply increases the nation’s debt burden. Under normal circumstances, the US government would have to borrow this money from the private sector (companies or individuals) or the public sector (other nations’s governments). Under this situation, US government spending will create a new loan BUT the amount of money in the system would remain the same. For example, money will simply be transferred from one entity to another and the debt instrument (bond) will simply be transferred from the borrower to the lender. This process is NOT inflationary because it does not inflate the money supply.

    However, what the Fed is doing is create new dollars to fund the US government’s spending program and this is inflationary as it inflates the amount of money in circulation.

    For sure, if the Fed did not create this new money and lend it to the US government, the US government would still be able to borrow the existing money from the sources I have described above but the lenders would demand a MUCH higher rate of interest and in this case, the money supply would not expand. There would be no inflation.

    Unfortunately, the Fed is creating new dollars to lend money to the US government and this is inflation 101. Inflation or expansion of the supply of dollars in the system. I’m sure you’re smart enough to realise what I am explaining.

    PLEASE try and understand and realise your mistake.

  • Anonymous

    “Hussman lives in a textbook”

    I’m surprised you said that, since essentially the same insult has been unfairly used against you.

    Personally I believe the two of you are not as far apart as you think. But I would be very interested in hearing a fairer assessment of your actual disagreement with Hussman’s work, since I consider you two to be the best informed sources of commentary I have found on the web.

  • Anonymous

    Mish wrote this thesis long time ago.

    But I guess also an attempt to influence inflation expectations using people’s misguided believes that more reserves mean more lending / inflation or that the wealth effect works.


  • Anonymous

    As far as I understand the MMT argument:

    1. Banks are the main buyers of the new issued debt
    2. Banks do not use cash for buying the bonds, but buy them on margin (or whatever), thus creating new money.


  • Tyler

    Actually, I would enjoy an analysis of Hussman’s points as well. Up until a week ago I relied most heavily on Rosenberg, Hussman, and Roche (Prag Cap), but I have never been able to rectify what appear to be differences in understanding of the QE program and its implications between Hussman and yourself. I know what Cullen means by “textbook” because it sometimes seems like Hussman gets stuck on complaining and ignores anything that he cant write an equation for. Dont get me wrong though, I have great respect for him.

    Thanks for this stuff Cullen.

  • http://www.pragcap.com Cullen Roche

    His work is mostly based on textbook modeling. I dont mean it as an nsult. It just is what it is.

  • Leland

    If you buy up large quantities of an asset when others don’t want them, thereby preventing the price of the asset from dropping (by design), doesn’t that necessarily imply that the asset is overvalued?

  • rapier

    The mechanism of Open Market Operations through the Feds Primary Dealers, which is the QEII mechanism, supplies liquidity to the financial markets. While it is true on a big balance sheet sort of way the QE can be said to do nothing in the real show me the money world that $100+- flowing montyly into the trading accounts of the Primary Dealers and their customer provides a permabid under the financial markets. Not all of them all days but in a rolling fashion which has given most every chart a bullish bias luring in more speculation, often leveraged, in a vicious circle.

  • homer

    very poorly written article, not clear, redundant, poor grammar but surely the points are essentially correct…we are on the outskirts of hell.

  • Steve

    When the only tool you have is a hammer, every problem looks like a nail. Despite all the jawboning and Fed speak about all the monetary “tools” they have to work with, they really have only one. Digital creation of money, monetization of the debt, QE whatever… call it what you want but its only concrete result has been debasement of the currency.

    Eventually greed will overtake the bankers- as it always has. And the use of leverage will come back as well. So long as the Fed has shown its willingness to paper over risk taking and bad judgement, the banks will eventually wander back into the deep end. I suspect lending will increase as well since the banks make meaningful money on products and loans – not deposits. Its just taking a lot longer than Ben anticipated. And as half the country’s debt rolls over in the next 4 years, I think you can expect to see a lot more dollars digitally created because who is going to buy this debt if the Fed stops?

  • Kevin

    Hey Cullen,

    First of all, I agree that QE2 was just an asset swap. It is a monetary non-event. My reasoning/explanation for why is that given that the treasury market is an extremely liquid market, treasuries are monetary substitutes. When someone holds treasuries they can sell the treasuries at any time for money: in effect, the treasuries act as money. Since treasuries act as money (you can sell them for their par value at any time you like), taking 600 billion of treasuries out of circulation and swapping them for money doesn’t change anything, at least not on a monetary level.

    It does seem like the swap is a financial event, though. Quantitative Easing takes interest-paying assets out of circulation and replaces them with non-interest bearing assets. The immediate effect of the operation pushes down yields on treasuries. As a secondary effect, it also pushes down yields on other assets since people will invest the newly injected money into asset classes that still pay moderate dividends or yields. The extra demand pushes down yields on those other asset classes. Lower yields means higher prices. So even though QE2 is a monetary non-event, it is a financial event that pushes up asset prices.

    Would you agree?

  • http://www.pragcap.com Cullen Roche


    There is no new money in the economy after QE. As you stated, the operation is just a swap and does not give the banks the ability to do anything they couldn’t have done before. If they decide to go out and replace lost tsy interest they could buy other assets. This is the rebalancing effect the Fed speaks of. QE doesn’t necessarily drive down yields as we can clearly see. So, there appears to be no fundamental reason for other assets to be bid up. I would argue that the impact of QE is mostly psychological, based on confusion and resulting in excessive speculative behavior.

  • paul skinner

    Hey dude,

    Why don’t you reply to my above post?

    Why don’t you admit that my understanding is correct?

    Why do you keep ignoring the reality?

  • http://www.pragcap.com Cullen Roche


    There is no such thing as the govt “funding” its spending. You might be interested in the following:


  • paul skinner


    Under normal circumstances, the US government borrows existing money from the sale of Treasuries. However, with QE, the US government is borrowing newly printed/created money from the Federal Reserve. Thus, the total supply of dollars is increasing with QE! This is inflationary.

    What don’t you understand in this simple explanation?

  • paul skinner

    ‘There is no new money in the economy after QE’ How can you say this?

    If the Fed did not unleash QE, the US government would have borrowed existing dollar bills in exchange for US Treasuries.

    However, with QE, the US government continues to borrow and spend newly created dollars from the Fed, and these newly created dollars are now circulating in the economy (courtesy of the government spending program).

    My gosh, what don’t you see in this simple process?

  • http://www.pragcap.com Cullen Roche

    Govt spends first, sells bonds second. Where do we get the $ if its not spent first?

  • http://www.pragcap.com Cullen Roche

    You clearly didnt read the monetization article i sent you….

  • Paul Skinner

    “Government spends money first and issues Treasuries later!?”

    Where did you get this from???

    Government borrows money first (by issuing Treasuries) and then, it spends that borrowed money!!!

    If the government could simply spend money first, why would it need to issue Treasuries!!!!???

  • Paul Skinner

    I understand the system very well.

    I think YOU need to understand a basic fact – government borrows money before it spends it. If the government could simply spend money first, why would it need to borrow it!?

    Under the modern day system, money is borrowed by the US government – it does not have the authority to create its own money. Look at the dollar bills inside your wallet – what do they say? Federal Reserve Notes.

    Man, you are a smart guy – so, why did you fall for this rubbish?

    If the US government could simply create its own money, the national debt wouldn’t have been so high!!! The debt only exists because the US government does not have the authority to create and spend the money it wants.

  • http://www.pragcap.com Cullen Roche


    The US govt doesn’t need to borrow money. It is akin to an alchemist. Only they can create US dollars. There is no need to borrow. When the US govt wants to spend money they change numbers up and down in accounts. They issue bonds to drain excess reserves and help the Fed hit the overnight target rate. You are not taking the time to read my work thoroughly:


    I am not going to twist your arm to read it, but you seem like a smart and open minded guy. Perhaps take a glance at the entire piece and let me know what you think. I’d actually be interested in your feedback. It’s pretty dense material, but give it a go. I think you might be pleasantly surprised after you digest some of it.



  • paul skinner

    Hello Cullen,

    I have read your editorial but I am afraid I don’t agree with it.

    You are a smart and switched on guy but I don’t know how you have come to these conclusions. Allow me to explain, perhaps you will change your own opinion. If you do, it will be commendable if you do another editorial to rectify your error. I think this is very important because you have a large following and people need to be awakened to the scam of a monetary system in the US. So, here we go:

    Before the Fed came into existence in 1913, the US government had the authority to issue to its currency/money. When the US needed money, its government could simply create the dollars for the benefit of society. In those days, money was not created as a debt. It simply was money.

    However, in December 1913, a bunch of smart and greedy bankers escaped to Jekyll Island (Rockefeller, Rothschild, JP Morgan etc) and they colluded to form the Fed. The Fed was then enacted as law on Christmas eve when most Congressmen were away on holiday!

    Once the Fed came to power, it started issuing Federal Reserve Notes and henceforth, whenever the US government needed money (in excess of its tax receipts), it had to borrow the money by issuing Treasury securities. So, each time the US government needed money (in addition to tax receipts), it added to the nation’s federal debt.

    For decades, this story went on and this is why the US federal debt continued to grow. Historically, the US government would borrow money from typical sources (private, corporate investors and foreign governments). So, the US government would issue Treasuries and these money lenders would lend it the cash. Under this simple transfer of money, there was no inflation because new money was not created; it was simply transferred. In those days, inflation occurred from the expansion of private sector credit (which you keep alluding to). i.e. when people took on a new loan, it expanded the supply of money within the system – inflation.

    However, when the system broke in 2008, private credit started to shrink (deflation) BUT the Fed quickly expanded its own balance sheet to fund various parties. Initially, it bought toxic assets from banks and now, it is buying Treasuries directly from the government. It is this expansion of the Fed’s balance sheet which is inflationary – because, this newly created money has now entered the system. Agreed that the banks are not lending this money to the private sector but the US government is spending this money in the economy and this action is inflating the supply of existing dollars.

    Remember, since QE2 began, the Fed has purchased nearly 70% of newly issued Treasuries! If the Fed had not bought these Treasuries (lent newly created money to the government), then the government would have had to borrow the existing money from the usual parties (and at much higher yields). So, by unleashing QE, the Fed has created new dollars and lent that cash to the government; thereby increasing or inflating the existing money stock. This, my dear friend is inflation 101.

    I rest my case.

  • Peter D

    Paul, Fed is part of the consolidated government sector. Fed and Treasury are like husband and wife. Read some Warren Mosler on this and you’ll disabuse yourself of the notion of Fed not being part of the govt.

  • paul skinner

    Peter D,

    Fed is NOT a part of the government.

    The Fed is a private bank, run for private interests.

    This is the reason why the US is so deep in debt and why the nation is broke!!!!

    Go and watch the documentaries – Money Masters and Zeitgeist (you may find it on the net)

    Also, go and read the books ‘Creature from Jekyll Island’ and ‘Secrets of the Federal Reserve’.

    Finally, there is a long speech by Eustance Mullins on youtube, explaining the Federal Reserve system, try and see if you can find it.

    Once you have these books and watched the documentary, your eyes and mind will open. I don’t mean this in a patronising way. Good luck!

  • http://www.pragcap.com Cullen Roche

    Paul, Fed turns over all profits to Tsy after fees and expenses. Thats called being owned.

  • Peter D

    Paul, if you believe Fed is a private institution and not a “creature of the congress”, then indeed we’ll keep talking past one another.
    Yes, there are conspiracy theories floating around etc, but people who are actually intimately familiar with the operational side will tell you that while there is a lot of smoke and mirrors, in the end the Fed is not really different from any other CB out there. Which is why MMT consolidates the Fed and the Tsy. If you want to argue this point, then head over to Warren Mosler’s site http://moslereconomics.com/.