Wikipedia:Reference desk/Archives/Miscellaneous/2013 July 13

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July 13

The (U.S.) Fed, and its $85bn

(If you think Economics is a Science, let me know and I'll move the post over there...)

Last month, the Fed affirmed, with regard to their asset buying program, that they (1) might start (2) to taper (3) later this year. Naturally, Mr. Market reacted as if they said they (1) had decided (2) to stop (3) tomorrow. Mr. Market is famous for overreacting.

BUT, suppose the Fed -- without telling anyone -- decides to buy only $80bn in September and October, and $75bn in Nov and December, exactly WHO WOULD NOTICE? What would the general public see?

--DaHorsesMouth (talk) 18:07, 13 July 2013 (UTC)

Caution to Ref Desk Regulars (you know who you are): try to stay on topic. Do not take off in another direction, for instance that old chestnut about abolishing the Fed. Do not make stupid jokes or bad puns before the question has been answered. Do not start your answers with "I think". OK? Thanks!

There are many financial reporters who would notice and relay this info to the public. Not announcing it ahead of time would delay the reaction until the actual event (or perhaps a leak), but the reaction would likely be more negative, because now it would be combined with uncertainty about what the Fed might do next, if they no longer tell everyone their plans. Thus, announcing these things ahead of time is designed to lessen the negative effects and spread them out over time. StuRat (talk) 00:30, 14 July 2013 (UTC)

• This is a rtaher straightforward request for prediction, no? If there is some sort of reference you want, please make that clear. μηδείς (talk) 00:57, 14 July 2013 (UTC)

Prediction? Absolutely NOT. When I said "Do not start your answers with 'I think', prediction is exactly what I was attempting to rule out.

The questions are clear: "Who would notice?" and "How would they do so?" No predictions, no opinions, just straight up facts please...

StuRat: could you be more specific? WHAT exactly would a financial reporter notice? Is every single purchase of whatever-it-is-that-they're-buying published on a government website someplace?

--DaHorsesMouth (talk) 02:49, 14 July 2013 (UTC)

The fed regularly publishes financial reports. I'm not familiar with them, so I'm not sure where within them you would find the precise information you are looking for, or how detailed it might be. [1]. I'm also not sure how much time there would be between an asset buy and its appearance on a report. Someguy1221 (talk) 04:59, 14 July 2013 (UTC)

The Federal Reserve's balance sheet is published weekly,[2] so that's about the absolute latest someone would notice. I'm sure there are a myriad of other ways to find out. The Fed is currently buying Treasury securities and mortgage-backed securities; the rate of change on that would quickly be noticed if the market didn't also notice that the market supply was changing at an unexpected rate. NW (Talk) 03:11, 15 July 2013 (UTC)

Hmmph. I was hoping I might become that <someone>, but I don't see anything there that makes a lot of sense to me. Thanks for that link, NW.

Thus, I stand by my position that even if there's a line item in that H.4.1 report specifically for these purchases, no run-of-the-mill journalist is going to easily notice that we are or are not on pace to make $80bn rather than $85, since there's NO month-over-month comparison.

Thanks! --DaHorsesMouth (talk) 01:24, 16 July 2013 (UTC)

There is a weekly change rate, and financial companies monitor the actions of the Fed pretty closely. The average citizen or maybe even The Financial Times reporter won't notice it, but someone at JP Morgan or Morgan Stanley (or likely more accurately, their computer programs) will. NW (Talk) 18:21, 16 July 2013 (UTC)