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It’s because of complicated concepts like this one, brought to light by David Kotok of Cumberland Advisors, in his September 24 piece titled “Helicopter Hank”. He writes:
“… With the government holding a large portfolio of mortgages, the Fed’s ability to fight inflation will be conflicted, because each increase in interest rates will impose capital losses on those holdings, making it mroe difficult to sell them back to the marketplace and delaying getting them off the Fed’s and government’s balance sheets…”
A little hair on this dog, so it goes. Raise rates to fight inflation, see the value of the bond holdings and mortgage securities go down. Makes sense. This does not mean the plan by and large won’t work, but this is one of potentially several conflicts within the plan that are open to debate.