Weekend reads: This may cause the next financial crisis

The Federal Reserve invigorated the economy before and during the coronavirus pandemic by purchasing Treasury bonds. The central bank was the main purchaser of newly issued U.S. debt and created trillions of new dollars while doing so.

The Fed is now allowing its securities portfolio to run off as bonds mature as part of its effort to raise interest rates, cool the economy and quell inflation.

Joseph Adinolfi digs into the possibility that a liquidity crisis will result from the Fed’s actions.

What will the Federal Reserve decide next week?

Federal Reserve Chairman Jerome Powell has another big week coming up.

MarketWatch photo illustration/Getty Images, iStockphoto

The Federal Open Market Committee’s next policy meeting will take place Sept. 20-21, followed by an interest-rate decision on the 21st. Under the leadership of Federal Reserve Chairman Jerome Powell, the central bank is expected to raise its target for the federal funds rate by at least 0.75% and accelerate the runoff of its bond portfolio, which has been a catalyst for…

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