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overtheedge
Member since May 2012
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The New York Fed's Primary Dealers, Liquidity, Monetary Policy, and Excess Reserves in T - Jesse - Le Café Américain

Finally someone else see both the trees and the forest at one time.

It IS all about recapitalization of the TBTF banks.

You were told that the funds were sanitary and wouldn't enter the general economy.
You were told that we shouldn't experience uncontrolled inflation.
You were told that we need to get the banks lending again.
You were told that Americans need to spend money to get the economy on its feet again.
You were told, you were told, you were told.

The depressions are always about banks getting tight with loans. No loans, no bills get paid. No loans, no wages get paid. No wages, no taxable commerce. No wages, no income taxes. No commerce, no corporate taxes get paid. No taxes, no payments on national debt. Who holds the debt is irrelevant*.

Now we are recapitalizing the banks with the same medicine that got them in this mess rather than PMs.
Good luck with that. We are gonna need it.

*Over the past few thousand years there has been an antagonistic relationship between loan sharks and their borrowers. Usually after a series of problems, the loan shark faces severe hostility requiring they leave town immediately with whatever they can carry. The borrowers then experience a debt jubilee.

Imagine a more formal relationship where the loan shark proffers a debt jubilee to the most powerful, most influential and most in debt party or parties. Far better to keep a nice slice of pie and continue eating at the table than none unless you grab it and run. You don't have to keep a low profile and always be looking over your shoulder.

Now about the Treasuries held at the Fed, ...

Commented 4247 days ago

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Beginning of the headline :Someone asked me about Primary Dealers today. I think it was in regard to liquidity concerns. Cutting to the punchline, however one wishes to characterize and attribute it, the financial system is once again over-leveraged, over-concentrated, fraught with interconnected with counterparty risk, and fragile. This is because of the policy failure of the Treasury and the Fed which could be characterized as extend and pretend without engaging in significant reforms and law enforcement in the aft... Read More

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