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The Fed just dropped $18.5 billion into the banking system this week. It's only the fourth biggest cash infusion since the pandemic panic and even tops the dot-com bubble's peak. (fred.stlouisfed.org)

submitted 2 months ago by cm0002@toast.ooo to c/usa@midwest.social

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[–] lath@piefed.social 12 points 2 months ago (1 children)

From the link

This series is constructed as the aggregated daily amount value of the RP transactions reported by the New York Fed as part of the Temporary Open Market Operations.

Temporary open market operations involve short-term repurchase and reverse repurchase agreements that are designed to temporarily add or drain reserves available to the banking system and influence day-to-day trading in the federal funds market.

A repurchase agreement (known as repo or RP) is a transaction in which the New York Fed under the authorization and direction of the Federal Open Maker Committee buys a security from an eligible counterparty under an agreement to resell that security in the future. For these transactions, eligible securities are U.S. Treasury instruments, federal agency debt and the mortgage-backed securities issued or fully guaranteed by federal agencies.

As per my understanding, banks ran out of cash to loan so the feds gave them some with the theoretical agreement that the banks will pay them back later.

[–] pack@sh.itjust.works 5 points 2 months ago (1 children)

Gotcha, thank you. So every night theres around 800mil of these and it spiked 25x. Theories why? Banks need liquidity, why don't they have the cash on hand? unreported losses? over leveraged?

[–] lath@piefed.social 2 points 2 months ago* (last edited 2 months ago)

I'm not in the know with current events beyond the AI bubble needing to build a lot of infrastructure that doesn't exist and ICE needing a lot of warehouses for their concentration camps.

Then again, a lot of small-time businesses supposedly went and are going bankrupt + unemployment went way up compared to previous years, so there's probably some kind of disaster going on in the background.

Just guessing though...

Edit: came across this https://piefed.social/c/business/p/1796464/amd-s-ai-chips-to-be-used-as-debt-collateral-in-300-million-loan-report-says-cloud-star

Might be just a coincidence.