Posted on 09/24/2019 9:52:03 AM PDT by Enlightened1
he Federal Reserve on Tuesday injected longer-term cash into the U.S. banking system in an effort to meet the funding needs of banks and Wall Street following a bout of turbulence in money markets last week.
The New York Federal Reserve added $30.0 billion cash into the banking system through 14-day loans to primary dealers. These 14-day term repurchase agreements (repo) were on top of the $75 billion in temporary cash through an overnight repo operation.
Primary dealers, or the top 24 Wall Street firms that do business directly with Fed, borrow from the central bank by using their Treasuries and other bonds as collateral.
Their demand for funding was strong with $62 billion in bids submitted for the 14-day operation and $80.2 billion at the overnight operation, data from the N.Y. Fed showed.
A week ago, the Fed started to add large-scale liquidity into the financial system for the first time since the height of the global credit crisis, which a decade ago nearly froze the repo market - a major source of cash for banks and Wall Street.
Last Tuesday, overnight borrowing cost in the $2.2 trillion repo market spiked as high as 10%, which was five times more than what the central bank is targeting now.
Analysts generally blamed a shortage of bank reserves as the culprit for the market turbulence, together with huge seasonal payments for taxes and Treasury supply.
The N.Y. Fed will conduct overnight repo operations, worth at least $75 billion, daily through Oct. 10.
It will hold two more 14-day term operations, worth at least $30 billion, on Thursday and Friday.
(Excerpt) Read more at reuters.com ...
Wall Street firms that do business directly with Fed, **borrow** from the central bank by using their Treasuries.
What could go wrong
The Weimar Republic is nice this time of year...
Stock Market no likey!
“Spend all you want, we’ll make more!”
i am beginning to think (always a dangerous condition!) that there’s something going on...
the banks were refusing to lend overnight cash to each other .....what was, is that all about?)
the fed injected a reported $400 BILLION into the economy by stepping in and doing it for the recalcitrant banks
....now this additional fed $75Billion longer-term injection of more $$
half a trillion dollars of extra liquidity injected in just a week..
this looks like more Quantitative Easing, all over again
and its growing fast (and its already substantial)
more inflation coming
They have been already been adding 75 Billion new dollars a day every day since around September 18. They will add 75 Billion dollars a day every day until Oct 10th.
Now and addition 30 Billion a day for 14 days.
It has something to do with Short-term rates in the “repo” market spiked amid a shortfall in funding stemming from a variety of factors.
The Fed is responding with a series of liquidity injections aimed at preventing further capital droughts.
Great post BUMP!
Printing money with the stroke of a pen.
Glen Beck says this means another depression, and call Goldline.
China
There are times when the reporting of business as usual can be crafted so well, that people think something really unusual is taking place.
I’m not convinced we have something that out of the norm taking place here.
We know the fed pumps new money into the economy, and has been doing it for decades.
“They have been already been adding 75 Billion new dollars a day every day since around September 18. They will add 75 Billion dollars a day every day until Oct 10th.”
*********************************************************************
I’m pretty sure you understand this but others may not....this is the same 75 Billion dollars done over and over. Yesterday’s 75B of lent “funds” was paid back today and will now be lended out today to be paid back tomorrow....and so forth each day repetitively. It just adds a bit of liquidity to the economy.
Gold is at $1,533.00/oz. Silver is at $18.58/oz.
Mama Like! http://www.321gold.com/
P.S. Diversity in investing is your friend. YMMV. ;)
Theoretically, the money supply should be increased to match the value of an expanding economy.
What ever happened to the cries of “recession”?
Thanks for that description of what is going on.
As I thought, this isn’t the calamity Reuters was trying to get folks to buy off on.
To a degree I agree with you, but I think you might benefit from reading this post. I did.
http://www.freerepublic.com/focus/news/3780919/posts?page=14#14
>>>something going on...the banks were refusing to lend overnight cash to each other .....what was, is that all about?)
In 2008, it was an issue of the banks not trusting each other or the collateral being put up. In this case, it’s just a supply shortage. Banks hVe to hold more reserves post crisis and number of firms had to make tax payments. The Fed is stepping in to ease the supply constraint.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.