FED Quietly Steps in for $125 Billion

During the last week in October, while everyone was focused on the distractions de jour (Cough! Shut Down, Cough! Cough!) liquidity problems in the REPO market forced the FED to inject $125 Billion.

Wait! What?

Yep, $125 Billion.

Ironically (or NOT) we wrote about the possibility of FED intervention on October 27^th in a post titled:

 

Will the Markets Turn South This Week?

(Read it HERE)

 

In the article we mentioned how in mid-September the Federal Reserve’s Standing Repo Facility (SRF) was tapped for roughly $18.5 billion in a single day.

That was its largest draw since inception — suggesting that banks were again leaning on official backstops for liquidity.

 

You should interpret this as a series of Red Flags being raised.

Signaling that the banks are in desperate need of liquidity.

But there is a deeper issue at play…namely the entire system is under stress.

 

Because the last time something of this magnitude happened was during the 2020 Covid Hoax.

 

 

 

And as a result, in the last five years we have written numerous articles on the impending contagion in the bond market.

(READ them HERE)

 

Adding gasoline to this fire, the FED’s recent move comes as bank reserves drop to a four-year low of $2.8 trillion.

 

Translation:  Liquidity is certainly a valid concern.

 

And here’s where the average consumer never sees how we get screwed…

 

The Fed wants banks to trade US debt for cash and force the private sector to absorb the debt.

And the Fed does not want to publicly provide a bail out, so instead they inject money into the standing repo facility and lend against Treasuries.

 

 

 

 

It’s a vicious circle.

And it will not end well.

 

$125 Billion Plus…

 

The Catch-22 here is that the public must have confidence in the banks, and the banks must have confidence that the Federal Reserve will always catch them before they fall.  Henceforth, the recent $125 Billion injection that didn’t even make the news cycle.

 

Fed Chairman Jerome Powell knows that the central bank lost the ability to control inflation.

And the way things are moving, the Fed will soon no longer be able to control panic in the bond market.

 

Bottom line here… The systemic issues are too far gone for repair.

But the Boyz will continue to use Duct tape to hold it together while banks will impose heavy regulations and capital restrictions.

And just like the $125 Billion Fed injection flew under the radar, the Boyz will use multiple distractions de jour to keep the clueless ones even more clueless.

Eventually, the banks will lose trust in the Fed, and the people will lose confidence in the banks.

Don’t be one of them.

Instead, learn how to adjust your investments to avoid another 2008 meltdown in our upcoming November Newsletter (HERE).

 

Share this with a friend…especially if they own a lot of bonds, especially government bonds.  They’ll thank YOU later.

 

And tell them:

 

We’re Not Just About Finance

But we use finance to give you hope.

“And you shall know the truth, and the truth shall make you free.”

~John 8:32~