Monetary policy and central bank updates
Meeting-by-meeting coverage of Fed, ECB, BOJ and other central banks, focusing on rates, balance sheets and forward guidance.
if it's the central bank buying assets from other banks, such as in QE - then the central bank also creates the deposit "out of thin air", thus effectively paying for the assets to the commercial bank with a newly created deposit into their reserve account. base money increases
when banks buy assets from other banks - new deposits do not get created, as the payment happens by moving funds between the commercial bank's reserve accounts at the central bank
thus, it's base money movements/reallocation, not creation
the specific QE policies will vary, but it will probably include an MBS-style QE like in QE1 2008. this will lower mortgage rates short-term
I explained why in this thread: https://illya.sh/threads/@1754148538-1.html
the next burst in global liquidity/larger financial crisis will only happen after several more rounds of QE
the next round of QE is close, but hasn’t even started yet and rates were not cut. however, the next big debt refinancing is underway
i covered more this aspect of QE in my thread about how to use yield spreads to reason about future Bitcoin price and cycles
you can read it here: https://illya.sh/threads/@1755595543-1.html
once Fed does QE, reserve account balances increase, thus directly increasing base money
broad money either increases indirectly or directly if the Fed credits a non-bank institution