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Federal Reserve To Start Purchasing Treasury Bills

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Following a series of repurchase operations that were supposed to be temporary, last week Federal Reserve Chairman Jerome Powell apparently felt that the liquidity issue had not yet been solved.

As he said “Indeed, my colleagues and I will soon announce measures to add to the supply of reserves over time.” And sure enough, later in the week the Fed announced that it was going to start purchasing short-term treasury bills.

Which is startling in the sense that even after doing almost a month of repo operations, those transactions have not been able to calm the pressures in the funding market. Which in itself is far from ideal, although perhaps only exacerbated in how Federal Reserve officials continue to tell the public that things are normal in the market and there’s no cause for concern. Similar to how prior to the financial crisis in 2008 Ben Bernanke and Hank Paulson repeatedly warned the country about how the subprime issues were contained.

Fortunately Dave Kranzler of Investment Research Dynamics joined me on the show again to provide an update of what’s happening, what you should be aware of, and why the Fed is taking these unusual actions.

So to discover what’s really going on, click to watch the video now!

Chris Marcus

October 16, 2019

 

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