A thread of evidence and arguments that (i) the Federal Reserve is monetizing debt and (ii) that reserves are (like) cash, NOT a form of inert unspendable money (as many insist).

Federal Reserve:

“When you or I write a check there must be sufficient funds in our account to cover the cheque, but when the Federal Reserve writes a cheque there is no bank deposit on which that cheque is drawn. When the Federal Reserve writes a check, it is creating money.”

On QE: “If this accumulated Treasury debt is supposed to be permanent, then it is reasonable to expect that the corresponding supply of new money would also be permanent and would remain in the economy as either cash in circulation or bank reserves.... As the interest earned on

the securities is remitted to the Treasury, the federal government essentially can borrow and spend this new money for free. Thus, under this scenario, money creation becomes a permanent source of financing for government spending.” https://www.stlouisfed.org/publications/central-banker/spring-2013/is-the-fed-monetizing-government-debt

“in the US, commercial banks may use their central bank reserves to purchase newly issued treasury bonds, which implies a liability swap from the bank reserve account at the FED to the sovereign account at the FED (US Treasury 2004)” (IMF, p. 10).

https://www.imf.org/~/media/Files/Publications/WP/2019/wpiea2019285-print-pdf.ashx

@LukeGromen: "You can always say, 'it's not monetization; it's just an exchange of cash for debt.' And that’s fine... until the Fed goes, 'the balance sheet is not going to get below 3.5 trillion.' Well, you just admitted that you monetized 3.5 trillion" https://podcasts.apple.com/ca/podcast/know-your-risk-radio-zach-abraham-chief-investment/id1121724780

“[CB] balance sheets will never shrink from current levels. I think that is easy to agree with.... Now if that’s true is anything they hold actually debt? Because it is a perpetual non-interest bearing transfer, and where I come from we call that a gift." https://ttmygh.podbean.com/e/teg_0005/ 

@LynAldenContact: "Some analysts suggest that QE isn’t really printing money.... Although there is some truth to it, the problem with that analysis is that proponents of that view are only looking at one side of the ledger."

https://www.lynalden.com/quantitative-easing-mmt-inflation/

Zoltan Pozsar: G-SIB scores "determine what banks can do with whatever excess reserves they have at year-end: lend them through repos, spend them on Treasuries, or lend them through FX swaps” (p. 5).

https://research-doc.credit-suisse.com/docView?language=ENG&format=PDF&sourceid=em&document_id=1081995001&serialid=3Wu3wFUMyBePtRtdFV1OMYgKjlWVo06EvleE1YFXV0o%3D&cspId=1767182447312478208&toolbar=1

@PMehrling: "the Fed is expanding its balance sheet on both sides. So the desire that people have for cash can be met by creating more cash. That’s what's happening on the balance sheet of the Fed..." (11:50).

Bernanke (2002): "If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.”

https://www.federalreserve.gov/boarddocs/speeches/2002/20021121/