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Recession LedgerThe long downturn, dated and checked

Subject

The Fed

Quantitative easing, the yield curve, the balance sheet and the soft landing.

The Federal Reserve is the common cause in almost every essay on this site, which is not a conspiracy theory but a description of where the money came from. These pages explain what it did, in plain language, and record what its own officials said about it when they thought nobody was listening.

Start with the guide to quantitative easing if the mechanism is new to you.

A golden egg resting on a pile of dollar bills

2023

  1. Fedbucks coming to a theatre near you this summer: FedNow, the SVB editorial, and a catalogue of recent Fed flops

    The argument was that because the Fed had let the banks fail, the Fed should hold everyone's money directly. That is the fox applying for the henhouse on the strength of the feathers.

2022

  1. Fed up and under-fed at the same time: tightening a labour market that is short of people

    The plan was to lay off workers who were already too few, to reduce production that was already lower than the year before, to lower prices that were high because production was short.

  2. The Federal Reserve crashes the plane en route to a soft landing

    Two pilots tried to swap planes in mid-air over Arizona that weekend. One plane went into the ground. The Fed's flight plan was more ambitious.

2017

  1. Central banks buying stocks: how the Swiss and Japanese central banks came to own the American market

    A former Fed governor had said on television that the Fed front-loaded the rally. The question in 2017 was who was still buying, and the answer was in Zurich and Tokyo.

2016

  1. A Fed official confesses: the Fed front-loaded the stock rally, and a correction is coming

    For six years the existence of a 'Fed put' was denied by the Fed and by most of Wall Street. Then a man who had sat at the table described it, cheerfully, on television.

2012

  1. An idiot's guide to quantitative easing: what QE is, how it works, and why bad news became good news

    The Fed cannot buy the government's bonds from the government. So it lets the banks buy them first, and buys them from the banks a few days later, at a premium. That is the whole trick.