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Can anybody explain this to me, please?

The Fed in March raised interest rates for the first time since 2018, boosting by 25 basis points. Earlier this month, the central bank raised rates by another 50 basis points - the biggest move in 22 years - and Fed Chair Jerome Powell signaled similar increases could follow as it also starts unwinding assets accumulated during its fight against the pandemic's effects.

Source: https://finance.yahoo.com/news/why-u-stock-market-tumbling-054451400.html

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  • unwinding assets is a "euphemistic" alternatuve to asset stripping - converting various corporate assets into "cash". With the Fed, it probably means they have corporate "promissory notes" for money they printed during the pandemic to lend to companies, which they will ask to be repaid. Commented May 13, 2022 at 15:48
  • @FumbleFingers I thought 'asset stripping' was a dodgy capitalist practice/legitimate business activity (depending on your point of view) where a financial investor, often called a 'corporate raider', takes control of another company and then auctions off that company's assets. Commented May 13, 2022 at 15:53
  • @MichaelHarvey: And you don't think the Fed engages in dodgy financial practices? I'd say their actions are a significant factor in the exceptionally disruptive resurgence of post-pandemic inflation (and maybe also at least part of the reason for cryptocurrencies crashing, which the Fed would obviously thoroughly approve of). And imho they carry considerable responsibility for the dodgy practices (using unjustifiably-printed money) that led to the financial crash. Commented May 13, 2022 at 16:00
  • unwinding assets means selling them. It may or may not be asset stripping. The Fed has no power to do asset stripping. That is when you buy a large company with many divisions and sell them to make money.
    – Lambie
    Commented May 13, 2022 at 16:33
  • @FumbleFingers - maybe I shouldn't get into politics here, but who wouldn't approve of the collapse of what are clearly Ponzi schemes? Commented May 13, 2022 at 17:33

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As part of the Quantitative Easing strategy for addressing the pandemic, the Federal Reserve Bank purchased about $80 billion of Treasuries and about $40 billion of commercial and mortgage-backed securities each month. These are assets on the bank's balance sheet that aren't usually there. So now the bank has to get rid of those assets. There are many words you can use, such as: unwind, sell, release, shed, etc. "Unwind" is probably just as common as any other choice.

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  • unwind is sell and shed yes, release no.
    – Lambie
    Commented May 13, 2022 at 16:34

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