What’s Wrong With This Picture? Fed Reverse Repo Usage Continues To Grow Along With Fed’s Balance Sheet (Reverse Repos At All-time High)

Confounded Interest ^ | 12/18/2021 | Anthony B. Sanders

[Browns Ultra Fan]

I love listening to Fed talking heads (or Fear The Talking Fed). They mostly seem to acknowledge that inflation is a problem and that the excessive monetary stimulus should be reduced.

But then I see the chart of The Fed’s balance sheet and The Fed’s reverse repo operations.

Then we have Federal Reserve Governor Christopher Waller saying that Th Fed could start raising interest rates as early as its March 15-16 meeting, after deciding to end asset purchases sooner than planned. My question is … why wait until the March meeting?

Is it fear of the Omincron Variant (which sounds like a Frederick Forsyth thriller)? Does The Fed not want to rock the boat prior to the Christmas season? The US is at or near full employment, so what is the real reason for delaying a rate increase until March or June? Or the fear that Congress won’t pass Biden’s Build Back Better Act?

Fed Funds Futures infer that one rate hike will occur at the June Fed Open Market Committee (FOMC) meeting and one at the November meeting.

So will Powell get back in the saddle again and actually do his job?

[Browns Ultra Fan]

This should scare everyone. The Fed KNOWS something is wrong and is making it.

[cgbg]

The Fed will kick the can down the road as long as it can—and will give wealthy connected insiders early warning when it is time to bail...

[blueunicorn6]

Ohhhhhh…..

I love these games where you find stuff that’s wrong in a picture!

Hmmmmm…..

The first thing is that there isn’t a picture.

You gotta have a picture if there’s gonna be wrong stuff in it.

[TheConservativeTejano]

This should scare everyone. The Fed KNOWS something is wrong and is making it.

We probably will never see a "Ready to Shovel" job out these $2 Trillion that ole Biden has raised on the Federal Budget.

You end of saying how can that be $2 Trillion dollar hike on the Federal Budget which was a $1.2 Trillion dollar budget passed by the Congress and McConnel voted for this increase.

Biden has spent .8 Trillion ddollars without any authorization whatsoever.

This is what my Hign School Teacher was telling us when we wanted to know what the Definition of Inflation is going to be.

There will be no "Shovel Ready Jobs" passed by this sorry DemonRat Congress.

[jdsteel]

“ The US is at or near full employment…”

Bovine Scat.

[jdsteel]

Mayor Pete sez “shovel worthy”. Not shovel ready.

More BS.

[cgbg]

In this age of bureaucracy and enviro-wackoism there is no such thing as a “shovel ready job”.

Every piece of infrastructure is preceded by years of plans, lawsuits, bribery, studies, consultants, Native American analysis, historical preservation, affirmative action, environmental racial justice....it just goes on and on....

[PGR88]

To my untrained eye, doesn’t the continued increase in reverse-repo means simply that banks have no better options for their mountains of cash and reserves?

[mvonfr]

One reason is that the situation is worse than the 1970s inflation.

The traditional way of fighting inflation is to raise the interest rates -- and some governments are doing this right now, including Russia and Mexico.

But the US does not have this tool -- because raising rates will lead to raising the payments on the national debt, and the payments will not be sustainable without massive extra printing of dollars and thus will again lead to inflation.

In reality, I'm not seeing any good way out, any move loses. And if I were a politician, I'd do nothing -- hoping that the smelly brown substance hits the fan just a bit later. Heck, I would even continue printing more money, to perhaps alleviate the situation with some pet projects and don't forget about the 10% for the big guy and all the rest of dons.

And this is what we are seeing.

[griswold3]

Raising taxes across the board on everyone is another solution offered by many one handed economists.