Treasury account now over $1T for first time in history... and this is even with Mike having withdrawals up by about $450B in the last month...
However this is still not quite enough of an increase in issuance to overcome the Fed's addition of reserve assets at the Depositories and banks ability to provide additional credit is remaining a bit impaired...
Treasury should increase their balance by another $1T and that would be very helpful...
I've seen this kind of post here a few times now but I don't really understand it Matt. Can you spell it out for me? What does the increase in TGA account mean? Why is increase of bank reserves a negative for lending? Thx.
ReplyDeleteAccount statements are best saved for a weekday, not a weekend (especially a Sunday) :)
ReplyDeleteGolf is closed here Greek.... and I cut the grass yesterday....
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ReplyDeletePancake house is closed...
ReplyDeletedave if you see the TGA go up like this then it means reserves have been "drained" from the Depositories by that same amount...
ReplyDeleteThis account can go up due to Treasury issuing more securities than it redeems or if the receipts are in excess of withdrawals .... or combination...
Bottom line is a TGA increase removes or "drains" reserve assets from depositories and acts to increase the Depository system regulatory leverage ratio...
Banks can then perhaps increase loans or perhaps increase the asset prices of existing risk assets...
Dave, Matt helped me in the comments to the following posts on this same issue, maybe they'll help you too.
ReplyDeletehttps://www.blogger.com/comment.g?blogID=2761684730989137546&postID=4646728888252167810
https://www.blogger.com/comment.g?blogID=2761684730989137546&postID=7639637326340751295&page=1&token=1585173915214
https://www.blogger.com/comment.g?blogID=2761684730989137546&postID=5258556923189855557&page=1&token=1587173743440
Look for the (A-L)/A stuff.
The debate is raging on Bills blog post today.
ReplyDeleteMatt's chance to clear it up once and for all.
Seems like the supplemental leverage ratio is suspended for one year by the Fed. However, I saw a post on this blog some other government agency overturned it. Agree with Franko it is strange this ratio does not get more attention.
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