The Fed has been pumping cash into banking system the last couple days

[Paulie]

Their own target overnight rate that they set got out of their control and had spiked up to 10% at times before they injected cash through repos.

Anybody got any theories? It’s that same kind of weird activity that preceded the ‘08 collapse.

 

[Dekster]

The fed is reducing its treasury holding, the government is issuing a ton of new treasuries and quarterly taxes are coming due...that is the official reason at least.

 

[Paulie]

The fed is reducing its treasury holding, the government is issuing a ton of new treasuries and quarterly taxes are coming due...that is the official reason at least.

The feds been selling treasuries for a while now, this is all normal economics but the overnight rate issue is not normal. I’m mostly bullish on the economy but the bond situation worries me and this unusual banking activity does too.

 

[georgephillip]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

 

[Toddsterpatriot]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

 

[Paulie]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

 

[Toddsterpatriot]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

Banks calculate their reserve requirements at the end of the day and loan out their excess or borrow their shortfall. Recently there has been a systemwide shortfall.

 

[Paulie]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

Banks calculate their reserve requirements at the end of the day and loan out their excess or borrow their shortfall. Recently there has been a systemwide shortfall.

But WHY? Is it because the fed reduced their balance sheet and removed too much money from reserves? You can’t tell me you think this is normal typical activity.

 

[georgephillip]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves

What if "they" are lying (again)?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"A critical consideration in taking the Federal Reserve and/or the New York Fed at their word about what is really going on is that these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

"These operations were secret from both Congress and the American people.

"The Fed justified its actions after they were exposed as a result of legislation and a court action by saying that its emergency lending authority under the Federal Reserve Act gave it this power."

 

[Paulie]

Just imagine what we’d discover if we fully audited the Fed.

 

[Toddsterpatriot]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

Banks calculate their reserve requirements at the end of the day and loan out their excess or borrow their shortfall. Recently there has been a systemwide shortfall.

But WHY? Is it because the fed reduced their balance sheet and removed too much money from reserves? You can’t tell me you think this is normal typical activity.

But WHY? Is it because the fed reduced their balance sheet and removed too much money from reserves?

That, combined with quarterly corporate taxes and recent Treasury auctions.

You can’t tell me you think this is normal typical activity.

It's not. That's why some people are losing their shit.

 

[Toddsterpatriot]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves

What if "they" are lying (again)?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"A critical consideration in taking the Federal Reserve and/or the New York Fed at their word about what is really going on is that these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

"These operations were secret from both Congress and the American people.

"The Fed justified its actions after they were exposed as a result of legislation and a court action by saying that its emergency lending authority under the Federal Reserve Act gave it this power."

these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

Yeah, profitable, repaid, collateralized overnight loans are awful! DERP DERP.

 

[Toddsterpatriot]

Just imagine what we’d discover if we fully audited the Fed.

Explain what you mean by "fully audited".
Be as specific as you can.

 

[georgephillip]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves

What if "they" are lying (again)?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"A critical consideration in taking the Federal Reserve and/or the New York Fed at their word about what is really going on is that these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

"These operations were secret from both Congress and the American people.

"The Fed justified its actions after they were exposed as a result of legislation and a court action by saying that its emergency lending authority under the Federal Reserve Act gave it this power."

these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

Yeah, profitable, repaid, collateralized overnight loans are awful! DERP DERP.

hese are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

Yeah, profitable, repaid, collateralized overnight loans are awful! DERP DERP.

What's your opinion on current capital liquidity levels in the US financial system?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"During the question and answer period of Federal Reserve Chairman Jerome Powell’s press conference on May 1 of this year, Michael McKee of Bloomberg News asked the Chairman the following question:

"'I’m curious about the financial conditions that you see out there. The minutes of the March meeting tell us a few officials worried about financial stability risks. Was there a broader discussion at this meeting? Any consensus on whether such risks are growing as the markets hit new highs and we do see some instability in short-end trading. Is it possible that rates are too low at this point?'

"Powell answered the financial stability part of the question as follows:

"'…I’d say that the headline really is that while there are some concerns around nonfinancial corporate debt, really the finding is that overall financial stability vulnerabilities are moderate on balance and, in addition, I would say that the financial system is quite resilient to shocks of various kinds with high capital liquidity…'

"High capital liquidity doesn’t seem to correlate with the Fed having to pump $75 billion a day to infuse liquidity into Wall Street."

 

[Toddsterpatriot]

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"The storyline in the business press is that the lending rate on overnight repos had spiked to an unprecedented 10 percent, necessitating an emergency infusion of $53 billion by the New York Fed on Tuesday to ramp up liquidity for overnight loans and bring down the loan rate...."

"As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action."

Would the Fed's action be even more worrying if last Tuesday's infusion was scripted in August?

No.

As it turns out, the Federal Reserve’s Federal Open Market Committee (FOMC) directive that authorized the Tuesday operation was dated July 31, 2019 – 45 days prior to the action. What was it that the Fed saw in the tea leaves back in July that prompted it to write that directive on July 31?

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves

What if "they" are lying (again)?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"A critical consideration in taking the Federal Reserve and/or the New York Fed at their word about what is really going on is that these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

"These operations were secret from both Congress and the American people.

"The Fed justified its actions after they were exposed as a result of legislation and a court action by saying that its emergency lending authority under the Federal Reserve Act gave it this power."

these are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

Yeah, profitable, repaid, collateralized overnight loans are awful! DERP DERP.

hese are the folks who secretly funneled revolving loans cumulatively totaling an astronomical $29 trillion into Wall Street banks and their foreign bank derivative counterparties from December 2007 to at least the middle of 2010.

Yeah, profitable, repaid, collateralized overnight loans are awful! DERP DERP.

What's your opinion on current capital liquidity levels in the US financial system?

The Fed’s “Emergency” Actions this Week Were Dated 48 Days Earlier

"During the question and answer period of Federal Reserve Chairman Jerome Powell’s press conference on May 1 of this year, Michael McKee of Bloomberg News asked the Chairman the following question:

"'I’m curious about the financial conditions that you see out there. The minutes of the March meeting tell us a few officials worried about financial stability risks. Was there a broader discussion at this meeting? Any consensus on whether such risks are growing as the markets hit new highs and we do see some instability in short-end trading. Is it possible that rates are too low at this point?'

"Powell answered the financial stability part of the question as follows:

"'…I’d say that the headline really is that while there are some concerns around nonfinancial corporate debt, really the finding is that overall financial stability vulnerabilities are moderate on balance and, in addition, I would say that the financial system is quite resilient to shocks of various kinds with high capital liquidity…'

"High capital liquidity doesn’t seem to correlate with the Fed having to pump $75 billion a day to infuse liquidity into Wall Street."

"High capital liquidity doesn’t seem to correlate with the Fed having to pump $75 billion a day to infuse liquidity into Wall Street."

You understand that they aren't pumping $75 billion new dollars every day, right?
The total isn't $75 billion, $150 billion, $225 billion, $300 billion, right?

 

[Paulie]

Just imagine what we’d discover if we fully audited the Fed.

Explain what you mean by "fully audited".
Be as specific as you can.

They get a vague audit by the congress which doesn’t divulge the details of their OMO. I want to know exactly from who, what, and when they’re buying assets. They say that it’s not open because it would hamper their ability to do their job but that’s unacceptable in this country. Only congress has the power to coin money and regulate the value. They already unconstitutionally gave that power away as it is, at the very least they should have the power to scrutinize their OMO.

 

[Toddsterpatriot]

Just imagine what we’d discover if we fully audited the Fed.

Explain what you mean by "fully audited".
Be as specific as you can.

They get a vague audit by the congress which doesn’t divulge the details of their OMO. I want to know exactly from who, what, and when they’re buying assets. They say that it’s not open because it would hamper their ability to do their job but that’s unacceptable in this country. Only congress has the power to coin money and regulate the value. They already unconstitutionally gave that power away as it is, at the very least they should have the power to scrutinize their OMO.

They get a vague audit by the congress which doesn’t divulge the details of their OMO.

Congress doesn't do their annual audit, KPMG does.

And why would an audit disclose details of their OMO?
Do you think IBM's audit gives details of who they sold hardware and services to?

I want to know exactly from who, what, and when they’re buying assets.

I want a night with Gal Gadot. I guess we'll both be disappointed.

 

[JimBowie1958]

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

It is the result of the Fed trying to keep interest rates down when the markets naturally push it to go up.

Repo Madness Day 5: NY Fed Pumps $65.8 Billion Into Funding Market | Breitbart

The Fed has been intervening in the repo market, which provides short-term funding vital to the largest Wall Street banks, ever since interest rates spiked on Monday. The cause of the interest rate spike remains a matter of speculation. The most popular theory on Wall Street is that the Fed’s earlier balance sheet reduction has left the market with too few dollars relative to Treasuries held by financial institutions.

The repo market is at the center of the U.S. financial system but it is little understood even by most people working in finance...

Here’s how it works. Each morning, traders at the big Wall Street firms put in bids to borrow cash and cash investors accept bids. The bids are promises to pay an interest rate and a pledge to post securities as collateral. Later the day, the securities get allocated to the cash investors. The following day, the repos get unwound in the morning. The cash investors get their cash back and the Wall Street banks get their securities back. Then it starts all over again.

Why do the big Wall Street banks fund themselves this way? It’s really just a more intense version of the basic model of banking: borrow short-term, lend long-term, and make your profit on the difference between the rates.

Usually, the repo process is nearly seamless. Most of the previous day’s trades just get rolled over into the next day’s repos, with a slight tinkering of the rates and slight shifts in the collateral.

But the market started to malfunction last Monday, with the implied interest rate rising far above the Fed Funds target. Every since, the Fed has intervened to hold the rate down. Many on Wall Street are now wondering if this will become a permanent feature of the market.​

 

[JimBowie1958]

They get a vague audit by the congress which doesn’t divulge the details of their OMO. I want to know exactly from who, what, and when they’re buying assets. They say that it’s not open because it would hamper their ability to do their job but that’s unacceptable in this country. Only congress has the power to coin money and regulate the value. They already unconstitutionally gave that power away as it is, at the very least they should have the power to scrutinize their OMO.

The Federal Reserve banks have not all been audited simultaneously which allows them to shift assets around between audits to appear to remain solvent.

 

[Toddsterpatriot]

They saw the need to put in place procedures they might need to implement in light of reduced bank reserves.

Yes, but why?

It is the result of the Fed trying to keep interest rates down when the markets naturally push it to go up.

Repo Madness Day 5: NY Fed Pumps $65.8 Billion Into Funding Market | Breitbart

The Fed has been intervening in the repo market, which provides short-term funding vital to the largest Wall Street banks, ever since interest rates spiked on Monday. The cause of the interest rate spike remains a matter of speculation. The most popular theory on Wall Street is that the Fed’s earlier balance sheet reduction has left the market with too few dollars relative to Treasuries held by financial institutions.

The repo market is at the center of the U.S. financial system but it is little understood even by most people working in finance...

Here’s how it works. Each morning, traders at the big Wall Street firms put in bids to borrow cash and cash investors accept bids. The bids are promises to pay an interest rate and a pledge to post securities as collateral. Later the day, the securities get allocated to the cash investors. The following day, the repos get unwound in the morning. The cash investors get their cash back and the Wall Street banks get their securities back. Then it starts all over again.

Why do the big Wall Street banks fund themselves this way? It’s really just a more intense version of the basic model of banking: borrow short-term, lend long-term, and make your profit on the difference between the rates.

Usually, the repo process is nearly seamless. Most of the previous day’s trades just get rolled over into the next day’s repos, with a slight tinkering of the rates and slight shifts in the collateral.

But the market started to malfunction last Monday, with the implied interest rate rising far above the Fed Funds target. Every since, the Fed has intervened to hold the rate down. Many on Wall Street are now wondering if this will become a permanent feature of the market.​

But the market started to malfunction last Monday, with the implied interest rate rising far above the Fed Funds target. Every since, the Fed has intervened to hold the rate down.

The Fed has always intervened in the overnight market.

Prior to the crisis, if the Fed Funds rate dropped too low, they borrowed to bring it back to the target range. If the Fed Funds rate rose too high, they lent to bring it back into the target range.

Rates rising too high isn't a malfunction and the Fed intervening isn't unprecedented. Far from it.