Quote from: Yaka_MoZ on September 18, 2019, 12:53:37 PM

The Fed is rushing 53 billion dollars of liquidity into the financial system.

Markets were caught in a "perfect storm" on Tuesday, forcing the U.S. Federal Reserve to intervene for the first time in ten years.
This is the kind of emergency response that brings back bad memories, those of the 2008 financial crisis. The US Federal Reserve (Fed, central bank) was forced to inject $53 billion (48 billion) of liquidity into the financial system on Tuesday morning to contain the level of interest rates on the repurchase market.

This market allows cash-strapped institutions to find the funds they need to spend the night, by temporarily selling securities in exchange, most often treasury bills. Repurchase operations are low-risk and are financed at rates that are expected to move in the same direction as those of the Fed, within a range of between 2% and 2.25%.

But these repo rates have tightened sharply, reaching 6% on Monday afternoon and 10% on Tuesday morning. Financial markets have been caught in what the Financial Times calls a "perfect storm", forcing the Fed to intervene for the first time in ten years. Clearly, there was no longer any money at a reasonable price and the Central Bank of New York had to make 75 billion dollars of liquidity available urgently (53 billion dollars were consumed).
There are many explanations: first, American companies had to pay their taxes on September 15, which reduced the amount of dollars available. Then, the U.S. Treasury, whose deficits are soaring, held auctions that were supposed to be settled on Monday for $78 billion, and the banks, by subscribing to them, had to consume their reserves in dollars. Finally, the same Treasury had an extremely low level of reserves with the Fed ($184 billion on September 11, compared to an average of $400 billion since 2015) and it would have been tempted to increase the level of its bank account after the debt ceiling was raised by Congress.

This would explain the crisis. According to a source close to the central bankers, it is assured that this is a technical problem and that there are no hidden wolves. Rates had returned to their normal level on Tuesday afternoon.
Nevertheless, the case raises concerns, as the Fed closes its two-day meetings on Wednesday, September 18. A debate is starting to take place as to whether there is enough liquidity in the financial system.

Since the 2008 crisis, the Monetary Institution had bought the banks' claims (the famous quantitative easing) to maintain liquidity in the markets, but it has since reversed its course and reduced the number of securities in its portfolio. As a result, banks have less cash reserves available from the Fed (USD 1,300 billion compared to USD 2,900 billion in 2014), making them more vulnerable to a sudden need for liquidity. Interventions of this type were frequent before the 2008 crisis," says French economist Thomas Philippon, a professor at New York University.

Finally, the Financial Times explores a final possibility, that of the recent ups and downs on the black gold market that could have created a market effect. In addition, there is the problem of Saudi Arabia, the kingdom being partially deprived of dollar revenues with the temporary paralysis of its oil installations. To meet its expenses, Riyadh could have drawn on its dollar reserves.

In any case, the case shows the nervousness of the financial markets despite the accommodating policy of the central banks.

Let us look at it positively, these 53 billion will most probably be squandered in the crypto world BSV - CLOAK - CROWN and others...

Pls be serious - there is no reason why that should happen at all.