once Fed cuts interest rates, more borrowing will occur, thus expanding broad money
Illya Gerasymchuk
once Fed cuts interest rates, more borrowing will occur, thus expanding broad money
it will also lower T-bill yields short-term, as the prices are bid up due to a lower risk-free rate
a lot of these US treasury purchases will be financed with short-term rolling debt (e.g. repo)
the newly issued Treasuries themselves will be used as collateral to borrow cash, many times over via rehypothecation