The GP asked "how does the Fed go about buying things?" You are arguing that they don't meet the definition of an "investor" because they aren't "focused" on profit. To your point here's a graph of the Fed's profit they they've given to the Treasury since 2012: https://i0.wp.com/www.brookings.edu/wp-content/uploads/2022/...
I'd argue that while the fed is not solely or primarily focused on profit, they very much do profit in their operations. That graphic comes from an article where some speculate what would happen if the fed didn't profit:
I think you got hung up on the word "investor" and missed GPs actual question "how does the fed buy?"
From the page I linked:
"The New York Fed's Open Market Trading Desk (the Desk) purchases agency MBS to sustain the smooth functioning of the agency MBS market, thereby fostering effective transmission of monetary policy to broader financial conditions."
They have a group of people that are going into the open market and buying and selling. I dunno what those people are optimizing for in their purchases when it comes to MBS, but The Fed interact with "the market" exactly like others do in this case.
These are the companies the fed chose to buy in 2020 when Covid was peaking.
And to be clear those were not purchased by the "trading desk" the Fed isolated those purchases into a separate entity which they called "SMCCF": https://www.investopedia.com/secondary-market-corporate-cred... (The result is the same: some humans at "The Fed" went out into the market and selected some securities to purchase based on some criteria)
lbotos|2 years ago
I'd argue that while the fed is not solely or primarily focused on profit, they very much do profit in their operations. That graphic comes from an article where some speculate what would happen if the fed didn't profit:
https://www.brookings.edu/blog/up-front/2022/06/01/what-if-t...
I think you got hung up on the word "investor" and missed GPs actual question "how does the fed buy?"
From the page I linked:
"The New York Fed's Open Market Trading Desk (the Desk) purchases agency MBS to sustain the smooth functioning of the agency MBS market, thereby fostering effective transmission of monetary policy to broader financial conditions."
They have a group of people that are going into the open market and buying and selling. I dunno what those people are optimizing for in their purchases when it comes to MBS, but The Fed interact with "the market" exactly like others do in this case.
And more specifically GP, https://www.investopedia.com/the-fed-s-corporate-bond-portfo...
These are the companies the fed chose to buy in 2020 when Covid was peaking.
And to be clear those were not purchased by the "trading desk" the Fed isolated those purchases into a separate entity which they called "SMCCF": https://www.investopedia.com/secondary-market-corporate-cred... (The result is the same: some humans at "The Fed" went out into the market and selected some securities to purchase based on some criteria)