WASHINGTON, DC, February 13, 2013 ― Ben Bernanke announced in September that the Federal Reserve would buy $45 billion per month of mortgage backed securities. In December, he announced the Fed would be purchasing $40 billion per month in US treasuries.
Since then, bank holdings of mortgage backed securities have barely budged. What little change there has been, has been upward. The banks are buying, not selling the MBS.
So where is the money going?
Every Friday the federal reserve releases a report called the H.8. It is not an entertaining read. Line 25 on page 18, however, is very interesting. It indicates that the cash assets of foreign banks which have divisions within the US mysteriously jumped, between January second and this past Friday, by $228 billion.
This is nothing new, but it would certainly be new to most Americans. A second round of quantitative easing, QE2, was used in the summer of 2011 entirely to prop up failing European banks.