$21 Trillion And Counting: Fed Misdirection and Powell’s Powder Puff Presser (Part 4)

So they made it official yesterday: It’s three hikes in 2018. But as we said in Part 3, if you care one whit about the plot of the dots you do indeed have your eye on the wrong ball.

Nevertheless, to repeat: The Fed’s massive balance sheet expansion under QE destroyed the historical federal funds market long ago. Under present circumstances, “rate” increases are simply an exercise in pleasuring US banks with another IOER windfall on their $2.1 trillion of excess reserves.