The Department of Welfare and Mendicant Services at the New York Fed has released the schedule of repurchase agreement (repo) Primary Dealer welfare support operations for the monthly period from November 15, 2019 through December 12, 2019. Let us give thanks.
The Fed bought $15.7 billion in T-bills, notes, and bonds from dealers. That’s higher powered money because the Fed is actually cashing out the dealers. TOMO is just a loan to enable them to carry their fixed income inventories without having to liquidate at a loss.
And boy they took some losses last week.
The Federal budget deficit is blowing out. Federal tax revenues are growing slowly, and Federal outlays are exploding. The Fed is monetizing the debt. Here’s why this is like the Boeing 737 800 Max.
If the Fed wants money rates to drop and stay down by another quarter point, it will need to imagineer even more money.
The Fed keeps imagineering money into existence, right on schedule. But t’ain’t buying what it used ta.
Today’s Fed POMO was small, but TOMO went through the roof.
It’s the same old “rescue the dealers and bankers, enrich the hedgies, and screw the little guy,” all the time.
The Fed is expanding its de facto Standing Repo Facility.
Notice the words, “at least.”
Nothing to see here. Move along.
Are bank regulations really behind the repo market problems? That’s what bankers and their hired mouthpieces are saying. But it’s absolute BS, of course. Here’s the real issue.
Fed repos were down on Friday, but we are not out of the woods yet. Not by a long shot. Here’s why. And why it’s scary.