George Gammon:

The Fed “prints” bank reserves (dollars) Bank reserves dollars can only exist on SELECT BANKS balance sheets The Treasury “prints” treasuries (dollars with a maturity) Treasury dollars can exist on EVERY balance sheet in the world Which is more liquid? Does QE add liquidity?

If treasuries are more liquid, QE CAN’T add liquidity. It removes liquidity and therefore QT would add liquidity. (Especially with Tbills) The opposite of what the Fed wants you to believe.

QE only adds liquidity when the asset being sold to the Fed has to be sold at 100 cents on dollar assuming it’s trading at a discount. IOW, 95% of the time QE reduces liquidity, 5% of the time it adds liquidity. It’s important to know the difference between the 2 QEs