Here’s today’s press release from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.
The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo) operations for the monthly period from November 15, 2019 through December 12, 2019. In accordance with the most recent FOMC directive, the Desk will continue to offer at least $35 billion in two-week term repo operations twice per week and at least $120 billion in daily overnight repo operations.
The Desk will also offer three additional term repo operations during this calendar period with longer maturities that extend past the end of 2019. These additional operations are intended to help offset the reserve effects of sharp increases in non-reserve liabilities later this year and ensure that the supply of reserves remains ample during the period through year end. They are also intended to mitigate the risk of money market pressures that could adversely affect policy implementation. The Desk will adjust the timing and amounts of repo operations as necessary to maintain an ample supply of reserve balances over time and based on money market conditions, consistent with the directive from the FOMC.
Detailed information on the schedule and parameters of term and overnight repurchase agreement operations are provided on the Repurchase Agreement Operational Details site.
The Fed will offer the dealers AT LEAST $120 Billion per day in overnight repos. It will offer AT LEAST $35 billion in 8, 13-15 day term repo operations. And it will offer a total of AT LEAST $55 Billion in special Christmas Giving Financing, which will almost certainly never need to be paid back.
Liquidity moves markets!Follow the money. Find the profits!
As I pointed out in an earlier post, the Fed is effectively monetizing the Federal Budget Deficit, dollar for dollar. In addition, it is ensuring that the Dealers can carry their bloated, overstuffed inventory of Treasuries until hell freezes over, and will never, ever, in god’s time, be forced to take a loss on those holdings because of adverse market conditions that puts the value of those portfolios under water.
God Bless the Fed! We thank them for the New York Fed Department of Welfare and Mendicant Services Program for Primary Dealers, ensuring their permanent profitability, and executive compensation packages. LIkewise, the Fed’s Primary Dealer Welfare Program will ensure that the stock market never declines again in our lifetimes.
Amen to that!