An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Thursday, November 26, 2020
Nathan Tankus — What the Hell is Going On With CARES Act “Funds”?
It’s a hypothesis which is the definition of “scientific “... now we have to test it... see if it turns out to be true... if it’s false and they somehow credit the TGA then we have assess that policy... it would create the potential for an even more rapid increase in Reserve assets at depositories than what we have been experiencing...
I think it may be indicative of Trump thinking he wins it in court and stays but doesn’t flip the house...
Then he gets Fed to maybe top off the TGA to 2T and has a big pot of 2T USDs in the TGA for a two year siege with crazy Nancy over the debt ceiling..,
Or if he can’t flip it in court he may go scorched earth on his way out the door and run TGA down to zero and leave sleepy Joe with no munnie and Mitch can screw Sleepy Joe and crazy Nancy for years over debt ceiling ...
He’s running TGA down to about 1,500b slowly right now... can’t leave it too low for if he stays and can’t leave it too high for if he has to go...
Treasury signed off on the May 15th Fed leverage reform and Treasury TGA policy has consistently exceeded their published guidance by almost $1T into the election... keeping Reserve assets as low as possible for as long as possible into the election... market bottom was March 23rd when TGA bottomed...
He’s said if he doesn’t win there is going to be a big market crash... if they let Biden steal it then all he has to do is run the TGA down in a short period of time and it’ll crash and he can blame it on Biden being elected... would also leave Biden with no munnie and debt ceiling imminent...
If he keeps it he can just start to run TGA back up as high as he wants until debt ceiling then he’ll have room to maneuver for a few years even if he can’t get a deal with crazy Nancy...
Or if he keeps it and he runs TGA down anyway it’ll crash and he’ll look really stupid...
I don’t have any evidence of what their real policy is ... all there is is evidence that they don’t follow their stated policy.., they never follow their official written policies...
So you really have to be on your toes with these people...
Yeah, it’s clear those right wingers were right that Trump just loves America, willing to let everything crash if he can’t be in charge....I’ve never seen a deeper demonstration of love.
Oh and Matt what is your “thesis” that lies over your hypothesis, the “under”thesis......a HYPO thesis is only something that might support a larger thesis. But there has to be more than one hypothesis, otherwise it’s a thesis all on its own!!!
Ok I looked more into this I th8nk it’s all already in the TGA...
The Treasury schema for its Daily Treasury Statement identifies the source of funds on the deposit side and the direction of funds in the withdrawal side.., ie there is no deposit for the “ESF” there is only a withdrawal for the “ESF”...
There is over 1.5T in the TGA there is more than enough USD balance to provide $400B to the Fed if it needed it...
The policy is ending and I guess the Treasury will reduce the TGA accordingly...
this one of the reasons the TGA balance has remained unprecedentedly high USD balances budgeted for possible Fed backstop..... creating a “reserve drain” TO THE DAY of the March 23rd market bottom...iow Reserves at Depositories have remained lower during this time....
Ending these loan backstops will allow Treasury to spend down the TGA... perhaps exacerbating the current credit contraction as banks will now have to allocate capital to these newly increased risk free reserve assets.,, will probably depend on how fast they do it.. otoh they also have banks building capital like banshees via elimination of buybacks and frozen dividends..,
TGA just went below 1.5T for first time in a long time yesterday.., looks like TGA is finally being drawn down...
“All there is is evidence that they lie all the time...... they never do what they say they are going to do”
Someone could probably say that...
My bottom line here is that if ANY admin implements a policy to very quickly draw down the TGA from its current abnormal high balance I’m very worried about that policy effect on risk asset prices.,,,
NOT A RECOMMENDATION TO DO ANYTHING IN ANY WAY SHAPE OR FORM..,
Trump doesn’t care what asset prices do right now. The rise last week which followed an announcement certifying results was seen by many as “support” for a Biden presidency, or at least a repudiation of Trumps totally brazenly anti -democracy tactics, and Trump had to immediately run to cameras to take credit. A fast fall in the next few weeks will just simply be spun by Trumpsters as a repudiation of Biden.
Trump is quite happy using whatever power he has trying to sew chaos on all the markets and playing it whichever way benefits him. Rises will be “his strong leadership” falls will be “fears of pending socialism”. Everyone is on to Trump. His MO is clear.
But dad gummit he is doing all this just cuz he loves murica!!!
There's so little evidence of any sort of improprieties whatsoever that Trump couldn't even hire a lawyer who specializes in election law.. Hence the clown show with senile old Rudy was dropping the campaign off to be cremated.. I think Rudy might have a public humilation fetish, few people have so thouroughly humiliated themselves on tv as he has over the last year(it's brought me a lot of joy). It's unlikely Trump will even pay him... The other theory is Rudy's working for a pardon, he has at least one fbi investigation open against him.
If they somehow are going to have Fed credit TGA for $455b (I don’t 100%believe that) then Fed going to report negative equity:
ReplyDeletehttps://www.federalreserve.gov/aboutthefed/2020-september-federal-reserve-banks-combined-quarterly-financial-report-unaudited.htm
They only had $151B of A-L as of end 3q...
It may have just been a convoluted letter saying they were going to end any guarantees to the Fed..,
"May have just been..." Sounds very scientific.
ReplyDeleteIt’s a hypothesis which is the definition of “scientific “... now we have to test it... see if it turns out to be true... if it’s false and they somehow credit the TGA then we have assess that policy... it would create the potential for an even more rapid increase in Reserve assets at depositories than what we have been experiencing...
ReplyDeleteI think it may be indicative of Trump thinking he wins it in court and stays but doesn’t flip the house...
ReplyDeleteThen he gets Fed to maybe top off the TGA to 2T and has a big pot of 2T USDs in the TGA for a two year siege with crazy Nancy over the debt ceiling..,
Or if he can’t flip it in court he may go scorched earth on his way out the door and run TGA down to zero and leave sleepy Joe with no munnie and Mitch can screw Sleepy Joe and crazy Nancy for years over debt ceiling ...
He’s running TGA down to about 1,500b slowly right now... can’t leave it too low for if he stays and can’t leave it too high for if he has to go...
We’ll know in next 30 days or so...
You believe Trump has a hand in this?
ReplyDeleteHe might...
ReplyDeleteTreasury signed off on the May 15th Fed leverage reform and Treasury TGA policy has consistently exceeded their published guidance by almost $1T into the election... keeping Reserve assets as low as possible for as long as possible into the election... market bottom was March 23rd when TGA bottomed...
He’s said if he doesn’t win there is going to be a big market crash... if they let Biden steal it then all he has to do is run the TGA down in a short period of time and it’ll crash and he can blame it on Biden being elected... would also leave Biden with no munnie and debt ceiling imminent...
If he keeps it he can just start to run TGA back up as high as he wants until debt ceiling then he’ll have room to maneuver for a few years even if he can’t get a deal with crazy Nancy...
Or if he keeps it and he runs TGA down anyway it’ll crash and he’ll look really stupid...
I don’t have any evidence of what their real policy is ... all there is is evidence that they don’t follow their stated policy.., they never follow their official written policies...
So you really have to be on your toes with these people...
Next time I do electrical work, I'll be sure not to follow the National Electrical Code. Gotta keep those homeowners on their toes.
ReplyDeleteYeah, it’s clear those right wingers were right that Trump just loves America, willing to let everything crash if he can’t be in charge....I’ve never seen a deeper demonstration of love.
ReplyDeleteOh and Matt what is your “thesis” that lies over your hypothesis, the “under”thesis......a HYPO thesis is only something that might support a larger thesis. But there has to be more than one hypothesis, otherwise it’s a thesis all on its own!!!
“all there is is evidence that they don’t follow their stated policy.., they never follow their official written policies.”
ReplyDeleteThere’s a better way of saying this Matt;
“All there is is evidence that they lie all the time...... they never do what they say they are going to do”
Trump has no clue WTF he is doing. It's all shenanigans.
ReplyDeleteAnd I wrote about this (the $454 bln "guarantee") and spoke about it in videos way before Tankus.
ReplyDeleteOk I looked more into this I th8nk it’s all already in the TGA...
ReplyDeleteThe Treasury schema for its Daily Treasury Statement identifies the source of funds on the deposit side and the direction of funds in the withdrawal side.., ie there is no deposit for the “ESF” there is only a withdrawal for the “ESF”...
There is over 1.5T in the TGA there is more than enough USD balance to provide $400B to the Fed if it needed it...
The policy is ending and I guess the Treasury will reduce the TGA accordingly...
this one of the reasons the TGA balance has remained unprecedentedly high USD balances budgeted for possible Fed backstop..... creating a “reserve drain” TO THE DAY of the March 23rd market bottom...iow Reserves at Depositories have remained lower during this time....
ReplyDeleteEnding these loan backstops will allow Treasury to spend down the TGA... perhaps exacerbating the current credit contraction as banks will now have to allocate capital to these newly increased risk free reserve assets.,, will probably depend on how fast they do it.. otoh they also have banks building capital like banshees via elimination of buybacks and frozen dividends..,
TGA just went below 1.5T for first time in a long time yesterday.., looks like TGA is finally being drawn down...
“All there is is evidence that they lie all the time...... they never do what they say they are going to do”
ReplyDeleteSomeone could probably say that...
My bottom line here is that if ANY admin implements a policy to very quickly draw down the TGA from its current abnormal high balance I’m very worried about that policy effect on risk asset prices.,,,
NOT A RECOMMENDATION TO DO ANYTHING IN ANY WAY SHAPE OR FORM..,
Trump doesn’t care what asset prices do right now. The rise last week which followed an announcement certifying results was seen by many as “support” for a Biden presidency, or at least a repudiation of Trumps totally brazenly anti -democracy tactics, and Trump had to immediately run to cameras to take credit. A fast fall in the next few weeks will just simply be spun by Trumpsters as a repudiation of Biden.
ReplyDeleteTrump is quite happy using whatever power he has trying to sew chaos on all the markets and playing it whichever way benefits him. Rises will be “his strong leadership” falls will be “fears of pending socialism”. Everyone is on to Trump. His MO is clear.
But dad gummit he is doing all this just cuz he loves murica!!!
Every politician claims success and repudiates failure. Heads I win, tails you lose.
ReplyDeleteNot true PP. Not true at all.
ReplyDeleteYour “everyone is equally bad” false equivalency is intellectually lazy. I get it that you hate humanity but everyone is not equally corrupt.
You mean Democrats are bad and GOP is good?
ReplyDelete;p
"if they let Biden steal it" Hahahahahahahahaha
ReplyDeleteYou have no real voters...
ReplyDeleteIt's the narcissistic dregs of humanity who gravitate to leadership positions. The few who aren't of that disposition are culled.
ReplyDeleteThere's so little evidence of any sort of improprieties whatsoever that Trump couldn't even hire a lawyer who specializes in election law.. Hence the clown show with senile old Rudy was dropping the campaign off to be cremated.. I think Rudy might have a public humilation fetish, few people have so thouroughly humiliated themselves on tv as he has over the last year(it's brought me a lot of joy). It's unlikely Trump will even pay him... The other theory is Rudy's working for a pardon, he has at least one fbi investigation open against him.
ReplyDeleteCan a pardon be issued before a conviction?
ReplyDeleteRudy and The Donald may be out of luck.