Comment by hammock
13 hours ago
M2 is $21 trillion, which is what the fed signed up to backstop. How much did NVDA sign up to backstop?
13 hours ago
M2 is $21 trillion, which is what the fed signed up to backstop. How much did NVDA sign up to backstop?
> which is what the fed signed up to backstop
No, it's not. M2 includes things like traveler's cheques and money-market funds.
Traveler’s cheques? Who even sells them anymore. American Express was the biggest issuer and they stopped years ago.
> Traveler’s cheques? Who even sells them anymore
Fair enough. Money-market assets are the real exception.
Ok how much did the fed sign up to backstop then? Surely it’s more than physical currency
> how much did the fed sign up to backstop then? Surely it’s more than physical currency
The Fed doesn't backstop physical currency. That is issued by the Treasury (specifically, the Mint). The FDIC backstops bank deposits; the U.S. guarantees is obligations.
The Fed doesn't properly "backstop" anything. It's the lender of last resort–if you have a Treasury or other good collateral, it will loan you money against it. It's a financial regulator. And it regulates interest rates (i.e. the price of money) to influence inflation and employment.
The only backstops the Fed truly makes are to banks, by guaranteeing to always stand ready to lend against Treasuries and other good collateral.
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