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.