Semantic Smokescreen

They burned down the gambling house
It died with an awful sound
--Deep Purple

This past week Fed chair Jerome Powell announced that the Fed will begin buying short dated Treasuries at the rate of $60 billion/month until at least Q2 2020. This officially marks the end of the Fed's balance sheet unwind and plot a new course down the path of quantitative easing (QE).

Some argue that this new program does not constitute real QE since it is not focused on long dated paper nor on providing accommodating monetary policy. Instead, its stated purpose is to ease pressure in money markets that have been losing liquidity for a couple of years.

This is nothing but semantic smokescreen. The Fed 'accomodates' the monetary system using one of two approaches. Lowering lending rates on credit money created out of thin air, or by simply printing money out of thin air. When it does so in the name of buying securities outright, it has become known as QE.

That is what the Fed is doing here. Whether it is called QE or simply money printing, the Fed is engaging in inflation to goose the monetary system.