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What are Open Market Operations?

Marginal Revolution University 196 views

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I think a better way of explaining this is that the GOVERNMENT OFFERS CHEAP LOANS TO BANKS until BANKS OFFERS CHEAP LOANS TO CUSTOMERS OR GOVERNMENT GETS/BUYS BANK LOANS until BANKS PREFER GOVERNMENT AS CUSTOMER INSTEAD
Comment from : @ChristianHill-e5t

Any idea what Libor is? (green bar graph)? or was this just a typo
Comment from : @Yestothetalk

Thank you 🎉
Comment from : @meetbhavsar1072

Amazing Thanks a ton
Comment from : @pgurung1586

God bless you all what you do for dummies like me!
Comment from : @mdltw10

this is incredible
Comment from : @jamesnewton6196

the pictures helped, I don't like words
Comment from : @trentdelong2295

Thank you was to clear
Comment from : @rutilira1600

Thank you!
Comment from : @kevinkavanaugh8221

Love from India❤️❤️🙏🙏
Comment from : @mohitkumawat4730

Volume very very low
Comment from : @amankarim5794

am I wrong? I thought at 0:37 this is called the discount rate
Comment from : @keb990

Thank jesus
Comment from : @DMBSRV

Fabulous Cleared all my doubts and very to the point video Amazing keep it up
Comment from : @rahul7976

Just a question, What happens if banks don't want to sell/buy it's T-Bils to The Fed?
Comment from : @davidteixemolins1527

Thankyou so much for making this concept so easy
Comment from : @sakshisahu4666

Thanks!
Comment from : @MahinAhmed

I love your videos! Thank you for putting quality material on your platform
Comment from : @dragomireliza476

hi thanks for doing these videos I did not quite understand what are the treasury bills that banks sell to the Fed to increase money supply? Has the bank previously bought the bills? Does the bank pay an interest for the money obtained? thanks Antonio
Comment from : @antoniociavolella4600

Thank you so much that was really helpful!
Comment from : @mrose_grbs

money printer go burrrrrr
Comment from : @xkidmidnightx

This only explains what Fed does not the OMO itself I mean on which basis banks buy or sell the bonds from/to the fed, and which banks get to make it?
Comment from : @behrouz6625

This information is outdated Please take down this video Lowering the fed funds rate does not increase the money supply since reserves do not have any effect on the amount of loans that banks make Please see the "credit theory of money" wiki
Comment from : @meow2646

More or less accurate explanation up until 1:26 No bank has ever loaned out any reserve, not for going back at least a 100 years The non-bank entities can’t hold reserves You need a reserve account for the with the central bank (Ie the FED) Banks create deposits when making loans, it’s not coming out of anyone’s bank account or bank reserves The reserves are for inter bank settlements, eg when a fresh mortgage is wired to the seller who happens to have an account with a different bank
Comment from : @laszlotorok1614

Neat explanation Was very useful
Comment from : @nishagowri2081

How did the institutions that sold the Securities to the Fed, get the securities they sold? They obviously had to buy them first, before selling them to the Fed What did the institutions that sold the securities to the Fed use in order to buy the securities from the Treasury and other government agencies? They either used their existing "loanable" capital, in which case, they did not need the Fed's OMO to supply them with "loanable funds" Or, they created a balance sheet entry as payment for the securities, in which case, they created a balance sheet liability, which was backed by the purchased security This would mean that the institutions that sold the securities to the Fed would have to use the proceeds to clear the liability of their books (From thin air, back to thin air) Of course, this is all predicated upon the false assertion that banks lend from their reserves and as documented by both the Fed and the BoE, they do not In any case, there is no factual basis supporting the theory that the Fed's Open Market Operations either increases or decreases the usable money supply
Comment from : @dwaindibley4137

This has made more sense than a 2 hour lecture
Comment from : @juwairiasadik3926

1:09 isn't there a big argument that banks cannot lend reserves though? Steve Keen etc?
Comment from : @xxczerxx

Please don't stop making videos
Comment from : @michelsalazar2140

Federal Reserves played a major role in causing the 2008 recession
Comment from : @FlamingBasketballClub

This view of money creation is outdated brHigher reserves do not lead to more loans What increases the number of loans is the demand for new loans
Comment from : @franganitomario

Thanks for explanation The monetary system should afford every citizen nothing less than a middle-class standard of living My video - poverty eradication worldwide/michael samuel - can be viewed on youtube
Comment from : @michaelsamuel7365