by Ryan McMaken
Back in October, the Fed already knew there was a liquidity problem. This is why in September, the Fed began a new round of quantitative easing to essentially bail out the repo markets.
Naturally, the Fed’s defenders, both inside and outside the Fed itself, insisted that this was not QE. Both Bloomberg (“When the Fed Fixes Repo Markets, Don’t Call It QE”) and the Wall Street Journal (“The Fed Is Buying Treasurys Again. Just Don’t Call It Quantitative Easing”) ran articles using lots of big words and technical language to explain how only hopelessly unsophisticated observers of the Fed’s magic would possibly think the Fed was going down the QE road again. The message was clear: “everything is fine. move along.”