Federal Reserve Chair Jerome Powell announced the cessation of the Fed's 'run-off' of excess reserves, effectively ending the destruction of dollars created during the pandemic. This policy shift halts the previous strategy of burning $2.4 trillion in reserves to maintain scarcity and value. Powell emphasized the importance of maintaining 'ample' reserves, indicating a potential return to money printing through bond purchases.
This decision marks a significant change in monetary policy, contrasting with historical fiscal practices such as colonial America's public burning of tax bills. The move aims to ensure sufficient liquidity in the financial system, reflecting the Fed's adaptive approach to evolving economic conditions.
Federal Reserve Halts Reserve Run-Off to Ensure Ample Liquidity
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