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NY Fed spends $53 billion to rescue overnight lending market

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2 hours ago, CayceG said:


How *should* it happen? And why is this bad?

The operations of the central bank were originally decoupled from the operations of the treasury to avoid the latter directly controlling the former, allowing the central bank to focus exclusively on responsibly managing the money supply and (hypothetically) the value of the dollar.  If the treasury directly controlled the central bank, the management of the money supply and the value of the dollar would be subjected to the short-term political interests of whatever administration held the White House.


Of course, it’s naive to think the White House holds absolutely no sway over the Fed’s decisions, but even marginal independence allows the financial markets to have faith in the dollar.


Without this independence, it’s very likely markets would soon lose faith in the future stability of the dollar, dump their dollar holdings, and send the exchange rate plummeting into an inflationary nightmare.

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19 minutes ago, sblfilms said:

I’m not entirely convinced as to what is being suggested is actually happening. We shall see!

Considering the strength of the dollar, I don’t think the financial markets are convinced either.  I’m hoping that doesn’t change, regardless of what the truth is.


But, indeed, we shall see.

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Another $105 billion pumped in.


The New York Fed continued its streak of market repurchase agreements, or repos, selling $75 billion of overnight repos and $30 billion of repos expiring in 14 days. Banks bid for $80.2 billion in overnight repos and $62 billion in 14-day repos, signaling strong demand in the government-backed investments.


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