Fed Repo Desk Gone Haywire: Taper Coming

The Fed has been buying assets since 2008 - what's wrong with selling some of them? For example, the Fed bought Trillions in mortgages in 2008 - I should hope that they've sold off most of that portfolio. The Fed bought a shit ton of US Treasuries as part of QE and it's other liquidity programs. Again - they rightly should sell some of it in order to somewhat balance their holdings. It would make sense.

The Repo markets uses US Sovereign Debt as collateral. It would make sense that making more available on the primary and secondary markets would help the Repo markets. The last thing an economy needs is scarce collateral.

The Fed Desk is extremely active in the markets. Has been for quite some time. For example - the Fed rolls coupons all the time. Think of it as re-financing at a lower rate (that's somewhat of an oversimplification, but the OP Seeking Alpha article is astonishingly doltish and hyperbolic).


kmiklas said:
So now the Fed is SELLING bonds into the Repo markets... soaking up the liquidity they created with QE by acting as a counterparty to repo offers.

Fed up to their usual tricks... this move basically amounts to a taper. Now they can announce no change in policy at the June meeting.

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Fed Repo Desk Gone Haywire: Taper Coming
May 30, 2021 2:12 PM ETAWTM, BAPR, BAUG...39 Comments
Summary
  • The Fed has not changed its messaging since the pandemic hit.
  • But the GDP is at 10%, and inflation's latest data annualized is also at 10%. Uh, you think it's time for a change?
  • The repo market may force the Fed's hand. The Fed has lost control with the huge demand to borrow from it at zero percent and put the money in risk assets.
  • Offsetting its $100B monthly purchases, the Fed just sold $500B in the last 2 weeks because of this whacked-out repo desk.
  • This was a prelude to the 2018 tightening
https://seekingalpha.com/article/4432134-fed-repo-desk-gone-haywire-taper-coming
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The FOMC has been creating FIAT money out of thin air for the past 108 years. What's wrong with creating money and buying up hard assets? Why work just create money buy hard assets.
 
Decay always occurs from within. The FOMC will continue to create money and buy up hard assets. With a wink and a nod, our nation will eventually collapse.
 
Rickshaw Man said:
Decay always occurs from within. The FOMC will continue to create money and buy up hard assets. With a wink and a nod, our nation will eventually collapse.
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And those puritan "good" nations that stayed on the gold standard are all killing it....oh, wait a minute there aren't any such things. But really if you prefer the standards of living of 108 years ago you can join the Amish, anything else is pretty hypocritical.
 
Nailed it.

Sig said:
And those puritan "good" nations that stayed on the gold standard are all killing it....oh, wait a minute there aren't any such things. But really if you prefer the standards of living of 105 years ago you can join the Amish, anything else is pretty hypocritical.
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Monkey central bankers see, monkey central bankers do.

Especially when the big monkey goes first.

Puritan "good" nations???? And the Amish are goldbuggers. Who knew?
 
Sig said:
And those puritan "good" nations that stayed on the gold standard are all killing it....oh, wait a minute there aren't any such things. But really if you prefer the standards of living of 108 years ago you can join the Amish, anything else is pretty hypocritical.
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You mean when a working man could buy a house, let the wife raise the kids. Put them thru college all on a working man's salary. I'm 59, my grandfather raised three boys, sent them all to college my grandmother stayed home. They had 4 acres of land in a small college town. They had a garden, chickens. TAMU is where two went to college and the third went to UT in Austin Texas. Try doing that now....Not a chance. Inflation...you ain't seen nothing. Just wait another decade.
 
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