The United States Federal Reserve has come under renewed scrutiny after launching a programme known as Reserve Management Purchases, which some analysts argue amounts to covert monetary expansion.
The initiative was announced on 10 December following a Federal Open Market Committee meeting that also delivered a 25 basis point interest rate cut.
Federal Reserve Chair Jerome Powell described the programme as a technical tool designed to “maintain an adequate level of bank reserves” with “no connection with the orientation of monetary policy”.
Under the scheme, the Fed will purchase short-term Treasury bills, beginning with roughly $40 billion in the first month of operations.
Officials say the purchases are intended to ease pressure in money markets, particularly during periods of heavy liquidity demand around year-end funding deadlines.
Arthur Hayes, former chief executive of crypto derivatives exchange BitMEX, has publicly challenged the Fed’s explanation in a sharply worded essay published on Substack.
The RMP is a barely disguised way for the Fed to cash government checks, Arthur Hayes said.
Hayes argues that despite avoiding the language of quantitative easing, the economic impact of the programme closely mirrors traditional money printing.