Treasury may be on a jihad to reduce reserves at Depositories being created by the Fed... article ofc mentions nothing about the TGA.... unqualified Art Degree journos too dumb...
We may learn more about current Treasury policy Wednesday... I have an email into them but they have not responded... may consider doing a FOIA request if they don't respond...
Treasury’s announcement Wednesday on its issuance plans for the coming months will signal how Mnuchin plans to manage a debt burden that’s poised to eclipse the record seen in the wake of World War II as a share of the economy.
Treasury Secretary Steven Mnuchin is likely to boost the government’s quarterly round of debt auctions to unprecedented levels this week https://t.co/mwRyouH3Yi— Bloomberg (@business) May 4, 2020
15 comments:
The backstop funds congress appropriated for Fed Corp bonds, fed ppp abs purchases and Main st. lending -- do the funds remain in TGA until Fed needs them, or what's the plan.
I think Fed would just purchase the financial assets with new additional reserves, then when the financial assets are repurchased at end of term Of the agreement reserves would reduce... Treasury would then let TGA fall safely without causing another GFC...
I think those Appropriations are there just so Fed knows for sure Treasury would not consider the Fed bankrupted if the securities they purchased are not repurchased at the end of the term... in effect...
No transparency from Treasury on this at all... journos too stupid to be able to ask...
I might look into FOIA request but if you need an attorney to do one of those then forget it....
What difference would it make if a journalist asked them that question?
The govt will do whatever Houdini accounting and circumventing of normal policy channels that is necessary......I hope. I hope they don’t ever make it LOOK like the Fed is bankrupted, that is stupid, even though it is also impossible. I also hope they never allow the TGA to go to 0. Also very stupid and unnecessary.
If you were given journalist access and could ask WTF would you do with that information? Tell them they are doing it wrong!!? I know, you’d recommend some trading strategy in the currency markets or Treasury markets!! Yipeeee ! Thanks for the hot tip Matt
It has nothing to do with journalists too stupid to ask
You guys better be right on this virus thing.. thats all I can say.... you guys better be right...
And btw if Treasury just all of a sudden transfers these balances from the TGA into Depository accounts under curent conditions all of your retirement assets are going to go zero bid just like 2008....
And I dont think the A-Team there is going to be able to figure it out again...
You talk out of one side of your mouth that you are a science guy, interested in truth, want to use a methodology that gives us a chance to answer important questions and then spend the rest of your time talking out your ass, using your own “theory” that Art degrees and their faulty , stochastic, synthesizing methods are THE source of our worlds ills. Your just an angry white guy we should ignore and keep automatic weapons away from. Just dont hurt anyone else while you erode yourself with the acid of bitterness
Here this is revealing about you:
"If you were given journalist access and could ask WTF would you do with that information? "
You dont see the value in failure... which then a competent person would know youd have to make some sort of corrective adjustment...
My hypothesis is that somehow Darwin is doing this to you... but I cant fully explain it yet...
You are fucking out of your mind if you think I don’t see the value in failure of experiments since pretty much most fail...but explain to me what failure you could illuminate with your question?
So if you got Mnuchin to say after your brilliant questioning “ Well, the main reason we do this is to give the Fed assurances that once these purchases and later repurchases of Treasury securities conclude, they will not be in violation of rules which prohibit the Fed from holding a negative equity position”... you think you would have something on him, that you’d pulled some curtain back, that this would be the seminal event to drive real, positive change in understanding!? That maybe you’d get the noble prize for journalism ?
So answer my question. If Treasury reveals that this action was taken, as you suspected, JUST SO the Fed would not have to worry about negative equity at any point... that’s all. What would you do with it? Right them an email back and say in all caps “ YOU MORONS THE FED CANNOT GO BANKRUPT!!”
”Treasury may be on a jihad to reduce reserves”
Figurative language. Art degree envy.
Right S
Must be that Sharia law has replaced our constitution
Btw last sentence of my previous post should have started.... Right then send.
Everyone go on twitter and ask Mnuchin what he is doing with TGA balance. He doesn't have that big a following, he will respond if he gets like 20 questions about it
Not a bad idea Ryan
It is a public forum that any comments can be saved. I’m not going to open a Twitter acct just to do that but I would read the thread
Something like that might move the needle a hair. An admission from Treasury that this whole thing is just accounting rules we can change at any time or find creative ways to circumvent
And Matt
Quit with your “You guys better be right about this virus thing”. Right about what? That it kills people at a significant rate, that it makes a lot of other people very sick enough to be hospitalized for 10-14 days, that it makes a LOT of other people sick enough that they can’t go to work for 10-14 days, that a lot of people who never feel anything still might, by going to work or a concert or a football game, infect others who will get real sick??? That it is way more contagious than a standard flu and has already killed in 2 months what a bad 12 month flu season (I know I know,flu season are usually considered 5-7 months but deaths are measured by full calendar years, people do get flus outside of flu season) might kill. ? That a vaccine is being worked on AROUND THE GLOBE (even in China) but is unlikely (not impossible) to be readily available before December? Right about the only effective ways to slow this spread and save hospitals from having to make very rough choices, prior to cure or vaccine, is to keep people apart as much as can be tolerated?
What do “Us guys” have to be right about? The above are all indisputable facts, not opinion....... and why aren’t you with us guys on this? Why is it a bone of contention for you?
Keep me posted Ryan if such a Twitter thread gets started. I’d pop some popcorn for that.
Matt or others who understand financial system,
I'm trying to understand your previous comment:
"And btw if Treasury just all of a sudden transfers these balances from the TGA into Depository accounts under curent conditions all of your retirement assets are going to go zero bid just like 2008...."
I assume this is because you previously explained the effect of reserves being increased with this equation for leverage ratio banks must comply with. In order to comply they would have to mark down asset prices.
(Asubrisk + Asubnonrisk - L) / (Asubrisk + Asubnonrisk) =. 0.095
That makes sense logically, but I don't see it in the equation.
To use real numbers:
(90 + 10 - 90) / (90 + 10) = 10/100 = 0.1 = 10%
If reserves (non risk assets) are increased by 10 by Fed or Treasury:
(90 + 20 - 90) / (90 + 20) = 20/110 = 0.1818 = 18.2%
Based on this it seems the leverage ratio (capital/assets) is better if reserves are increased. I must be missing some obvious detail though in the numbers. The only thing I can think of is if Liabilities change as part of reserve add, but my understanding was that Fed/Tsy add reserves and there is no liability change for banks.
Appreciate any insight.
Best
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