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No, the deficit is not getting larger due to QE. Certainly not directly, because that's impossible, and also not indirectly, either. Quantitative easing is a policy of purchasing government bonds with the intent of decreasing yields while injecting cash into the economy. It affects only the demand for government bonds, not the supply of bonds created by ...


3

The two Banks of the United States (the First and Second) were nothing like the modern Federal Reserve system. For example, the First was prohibited from buying government bonds (one of the main roles of the Federal Reserve system is to buy and sell government bonds). Further, neither of the national banks had any role in regulating the banking system. ...


3

I'm going to stick my neck out and say that the answer is no, not because I have a specific reference (people tend not to publish papers stating that something doesn't exist) but monetary systems has been a keen interest of mine for the past decade and if free banking was currently being practised somewhere I would almost certainly know about it. It has ...


2

For considering a question like this, because the Federal Reserve remits seigniorage to the Treasury, it can be helpful to integrate the balance sheet of the central bank and the treasury and consider them as a single entity. Since QE involves the purchase of higher interest rate long dated debt and financing that purchase with lower interest rate central ...


2

In modern economies, “money” is a liability of some entity. If it creates “money,” it is adding to its own liabilities. (E.g., bank deposits are liabilities of banks, and so if they just increased their deposits without offsetting lending activity, they just lowered their net worth.) The only “cheating” is counterfeiting: issuing instruments that pretend to ...


2

Widening the acceptable band for the overnight rate would reduce the effectiveness of monetary policy to a certain extent. If the actual market rate is near the middle of the band, then it would be possible for the policy rate band to be moved by 50 basis points, and the actual rate could remain unchanged. This implies a potential need for greater movements ...


1

1) Does "currency and bank deposits owned by the government of Canada" in (b) mean currency and deposits at the Bank of Canada? If not, are these deposits just deposits by the Canadian government at some other bank? And where does the government of Canada keep its currency? Yes. The Canadian Federal Government consolidates its deposits in a single ...


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