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QE4 Has Already Started

So the repo market has coniptions because it can’t fund the $1 trillion Government deficit anymore.

Because banks dont want to dump their Treasury postions all at the same time and crash the Treasury market.

So the Fed has to ride to the rescue and take on the burden of monetizing the deficit.

So QE4 starts now!

We must remember that the REPO market was a great PONZI engine providing almost costless funds to be used in leveraged carry trades to buy longer dated and higher yielding debt.

That engine no longer works……..no longer drives asset price appreciation.

The rise in REPO rates has basically made most carry trades using repo funds no longer profitable.

QE4  HAS ALREADY STARTED

Why?

Because the FED will have to implement QE4 to take all the treasury buying stress off the Banks.

Because right now the banks are holding up the Treasury market!

And it’s showing up as stress in the REPO market.

There’s just not enough REPO money to fill the growing hole in the Treasury dyke.

Full monetization of treasury debt coming to a market near you!

Reposted from Capitalstool.com

 

 

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1 Comment

  1. Danno Anderson

    Looks to me like the government can still do anything it wants to and do it in secret. So when the open free market indicates there is a liquidity crunch believe it. The government must do something about housing financing or everything will collapse.
    https://www.federalreserve.gov/monetarypolicy/bst_reports.htm

    The Federal Reserve’s disclosure about these transactions is available at http://www.federalreserve.gov/newsevents/reform_transaction.htm.

    The Dodd-Frank Act also established a framework for the delayed disclosure of information on entities that, after July 21, 2010, received a loan from the discount window under Section 10B of the Federal Reserve Act or from a Section 13(3) facility, or participated in OMO transactions. Generally, this framework requires the Federal Reserve to publicly disclose certain information about these discount window borrowers and OMO counterparties approximately two years after the relevant loan or transaction; information about borrowers under future Section 13(3) facilities will be disclosed one year after the authorization for the facility is terminated. The Federal Reserve’s disclosures under this framework began on September 28, 2012, and are available at http://www.federalreserve.gov/newsevents/reform_quarterly_transaction.htm.
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