I’m not as informed as I should be when making this comment, but doesn’t this mean that Banks used a lot of their cash to buy Treasury bonds only to not have enough leftover to comfortably lend overnight?
The only reason we are not in a recession is bc the administration is pumping billions into economy through various emergency subsidies. Even w this, the Fed is still having to put in billions more. It’s no wonder the federal deficit is growing at it’s fastest rate since the 2007 recession. The current administration is artificially propping up the economy and taxpayers will foot the bill.
New York Fed Injects $104.15 Billion in Short-Term Liquidity
Intervention came in two parts—a term-repurchase-agreement operation that will last 15 days and a one-day repo operation
for The Wall Street Journal
By Michael S. Derby
Updated Oct. 17, 2019 9:56 am ET
The Federal Reserve Bank of New York injected $104.15 billion in temporary liquidity into financial markets Thursday.
The intervention came in two parts. One was via a term-repurchase-agreement operation that will last for 15 days that added $30.65 billion. The other was via a one-day repo operation that totaled $73.5 billion.
Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a loan of central bank cash, collateralized by dealer-owned bonds. Last month, the Fed ramped up its repo operations for the first time in over a decade to help tame spiking short-term borrowing costs.
This week there has been some upward pressure in short-term rates, which some observers have attributed to the settlement of Treasury debt auctions and other factors. The effective fed funds rate has been, at 1.90% on Wednesday, trading toward the higher end of the fed’s range of 1.75% to 2%.
On Wednesday, the Fed also began buying large amounts of Treasury bills to help expand the size of its balance sheet as part of a longer-term solution for money-market volatility.
Write to Michael S. Derby at firstname.lastname@example.org
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
-Ludwig von Mises.
Just waiting for the resident poster that comes in here to belligerently scream and type essays that everything is okay.