Fed's QT: Drying Up Liquidity and Witty Repurchase Tricks

Originally published at: https://peakprosperity.com/daily-digest/feds-qt-drying-up-liquidity-and-witty-repurchase-tricks/

The Federal Reserve Bank of New York has been conducting temporary open market operations, involving short-term repurchase and reverse repurchase agreements. These operations are designed to influence day-to-day trading in the federal funds market and manage reserves available to the banking system. The Overnight Reverse Repurchase Agreements, in particular, have seen a decrease of $1.78 trillion since September 2022 due to Quantitative Tightening (QT), which drains liquidity from the system. The Fed’s assets have also decreased by nearly $1.3 trillion as a result of QT. However, the Fed has reintroduced the Standing Repo Facility (SRF) to provide liquidity to the market and banking system without adding to the balance sheet.

In the realm of economic theory, a speaker has argued that the Western world is in danger due to a shift from the model of freedom to collectivism. They emphasize the importance of economic freedom, private property rights, and free markets in promoting economic growth and ending world poverty. They criticize social justice as unjust and coercive, and warn against the influence of socialism, radical feminism, and environmentalism.

Meanwhile, the Treasury Department has reportedly asked banks to monitor customers’ transactions for signs of “extremism” following the events of January 6, 2021. This has raised concerns about the violation of civil liberties, with House Judiciary Committee Chairman Rep. Jim Jordan referring to it as “financial surveillance” and expressing concerns about the violation of privacy without a warrant or legal process.

In the energy sector, Steve St Angelo has discussed the concept of peak oil and its impact on the economy. He argues that peak cheap oil is not a myth and that conventional oil production peaked in 2006. He warns that as oil production declines, the economy will be affected, particularly the highly leveraged and overvalued financial assets. He suggests that investors should consider investing in real assets like precious metals to protect their wealth.

In the political sphere, tensions have escalated between the federal government and the state of Texas over border control. The federal government has warned the Texas National Guard to cease its efforts to block Border Patrol’s access in and around the Shelby Park area. Texas has responded by saying it will “not surrender to Biden’s destructive open-border policies.” This has led to numerous Republican governors in other states, especially the south, sending resources to Texas immediately. The year 2023 marked the first time in modern US history that the number of migrants far outpaced the number of births in America. The Democrats admitted the open border policy was a deliberate attempt to flood the nation with people who would vote for socialistic policies as they usher in the New World Order.