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Fed Withdraws Whopping $58 Billion In Liquidity In Latest Reverse Repo Test

Tyler Durden's picture


It appears there is just a little excess liquidity sloshing around out there. Moments ago the Fed announced that as part of its most recent overnight reverse repo "liquidity withdrawal preparedness test", some 87 entities provided the Fed with a whopping $58.2 billion in overnight liquidity in exchange for Treasury collateral at a 0.01% stop out rate. This was the largest amount in liquidity soaked up (or, alternatively, collateral provided) by the Fed in its recent history of Temporary Open Market operations going back to 2012.


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Mon, 09/30/2013 - 12:00 | 4005678 Tsar Pointless
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The Pittsburgh Pirates host their first playoff game in 21 years tomorrow night. I never thought I'd live to see them in the playoffs again. I honestly never thought they would.

Let's go Bucs!

Mon, 09/30/2013 - 12:11 | 4005703 Jack Napier
Jack Napier's picture

Whopping? The Fed wipes their ass with $58 billion. They gifted (not loaned) their primary dealers $16 trillion under the table alongside TARP according to a GAO audit. TBTF banks are sitting on all these dollars they aren't using so what's the big deal if they kicked some of it back? The Fed can conjure more up anytime they face insolvency anyway.

Mon, 09/30/2013 - 12:14 | 4005733 Dollar Bill Hiccup
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That was 58bn in a day. 20 trading days of that, i.e., 1 month, and you've got a trillion + ...

Mon, 09/30/2013 - 12:20 | 4005759 NotApplicable
NotApplicable's picture

Wouldn't it be the same $58B unwinding then rewinding every day?

Mon, 09/30/2013 - 14:32 | 4006310 strannick
strannick's picture

Shadow Banking 4eva. Fed prints money. Buys Treasuries from bankrupt Treasury, and Russia and China. Then Repos out the Treasuries to leverage up the Shadow Banking system. what could go wrong. Got gold? Russia and China do...

Mon, 09/30/2013 - 15:17 | 4006636 Pure Evil
Pure Evil's picture

Your just not very patriotic.

Buy treasuries now before they pass a law forcing you to buy them while confiscating your liquid assets to force compliance with the law.

(Somehow this sounds all too familiar)

Mon, 09/30/2013 - 12:18 | 4005760 Popo
Popo's picture

How does the Fed hope to conduct a scientifically-valid test the day before a government shut down?   If the markets plunge, what will the attribute the plunge to?  The government shut-down, or the reverse repo move?   Or are they trying to assist a little crash in celebration of the government shut down?    If the latter sounds too conspiratorial, consider that there is zero hope of a successful test today.  So one is forced to question what their point is.

Mon, 09/30/2013 - 12:33 | 4005830 Seer
Seer's picture

Thank you for this/that!

It should be clear even to the blind that it's all pure insanity.  We're only fooling ourselves.

Mon, 09/30/2013 - 12:59 | 4005962 MiguelitoRaton
MiguelitoRaton's picture

Is the Fed ensuring market pain upto and during the government shutdown to support the free-spending party in power?

Mon, 09/30/2013 - 12:39 | 4005852 pods
pods's picture

Well think about the % of people who know what a reverse repo is vs the number who have been scared shitless about the sun not coming up if the government shuts down.

Either on purpose to show negative effects of a shut down or there really is so much liquidity sloshing around they are providing safe harbor in case something tanks to their owners.


Mon, 09/30/2013 - 12:48 | 4005913 Riggers
Riggers's picture

Can we have a third group? How about I don't really know what a reverse repo is or what it means entirely but I'm fairly sure the government shutting down fits nicely in my agenda of getting rid of this govt. Since they aren't really shutting down but are only going to pay "basic" functions.. I still don't understand why they are paying UNnecessary functions in the first place. I'll be happier than a goat in a green field if they'd shutdown for good under those terms.

Mon, 09/30/2013 - 15:02 | 4006554 TheRedScourge
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If they fail to come to an agreement to raise the debt ceiling, all that happens is a spending cut (and possibly a tax increase) such that the budget instantly becomes balanced. No sort of "shutdown" occurs, merely something we all (unless we're on federal aid) would like to happen anyway.

Tue, 10/01/2013 - 07:35 | 4009028 Dollar Bill Hiccup
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"Repo" is a loan, collateralized by securities. It is a Repo or Reverse Repo, depending on who is the one getting cash (taking a loan) or securities (receiving collateral and making the loan).

If the FED performs a reverse repo, they are taking a loan of cash from banks and giving banks US Treasury securities as collateral. By taking cash from the banks, the FED is effectively withdrawing liquidity from the banking system.

That's the very short answer. Wall Street likes to make things appear complicated when in essence they are very simple. If things appear complicated, higher fees and more manipulation are possible.



Mon, 09/30/2013 - 12:43 | 4005882 Jannn
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Must Read: Building a strong economic and financial security barrier for China

Mon, 09/30/2013 - 11:59 | 4005679 Bay of Pigs
Bay of Pigs's picture

So everything is okay then?

Mon, 09/30/2013 - 12:20 | 4005762 max2205
max2205's picture dem taters....

Mon, 09/30/2013 - 12:01 | 4005682 Winston Churchill
Winston Churchill's picture

I for one wonder if that collateral is the toxic RMBS the FedRes has been buying up ?

Mon, 09/30/2013 - 13:05 | 4005998 mkkby
mkkby's picture

Huh?  This is a reverse repo.  Fed is selling, not buying.

It seems many folks including Tyler don't understand reverse repo.  It is ANOTHER LOOSENING OPERATION.  This time for the non bank/shadow banks.

Mon, 09/30/2013 - 13:44 | 4006121 xtop23
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Edit: I reread the post you were responding to and realized my response wasn't necessary.

Mon, 09/30/2013 - 12:05 | 4005693 hankwil74
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Translation in plain English for someone w/o an MBA would be greatly appreciated. Thank you in advance fellow ZHers.

Mon, 09/30/2013 - 12:14 | 4005721 Dr. Engali
Dr. Engali's picture

The fed is providing firms that need collateral (probably to meet margin calls) a way to get it. What they are saying is "you bring us cash 'excess liquidity' and we will give you bonds." Which is insane since the fed is printing money 'providing liquidity' to buy bonds. It's a big game of shells to support the ponzi scheme.

Mon, 09/30/2013 - 12:21 | 4005766 LostPolarBear
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Why would a firm need these bonds as collateral?  Couldn't they just use their "excess liquidity" cash as the collateral?



Mon, 09/30/2013 - 12:34 | 4005824 Dr. Engali
Dr. Engali's picture

Cash is not fungible and can't be re-hypothecated 10 time over. It is simply a credit on the balance sheet that can be levered.

Mon, 09/30/2013 - 12:40 | 4005861 kito
kito's picture

doc i see this as the fed testing the waters on potential pullback of qe. trying to gauge market responses to a lessening of liquidity in the market. how can we say its not their way of trying to gauge impact on the shadow banking system?

Mon, 09/30/2013 - 13:06 | 4006014 mkkby
mkkby's picture

You are DEAD WRONG.  Listen to the doc.  This is a loosening operation for the shadow banking system because collateral is tight.

Mon, 09/30/2013 - 13:10 | 4006029 kito
kito's picture

i  listen to the doc, especially since i lost a sandwich bet to him. 

Mon, 09/30/2013 - 13:17 | 4006069 Dr. Engali
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It's collateral the system needs, cheap collateral. The fed already saw what the result of tapering will be and it scared the shit out of them.

Mon, 09/30/2013 - 13:45 | 4006225 kito
kito's picture

these repos remind me of jurassic park, where the t-rex tests different parts of the fence in order to find a way out. looks to me that ben is trying to gauge system response to liquidity withdrawal in order to find a way out.

Mon, 09/30/2013 - 13:57 | 4006266 Dr. Engali
Dr. Engali's picture

They may be. Nobody knows for sure except for the fed. The best we can do is try to piece together what we believe is happening.

Mon, 09/30/2013 - 12:55 | 4005943 xtop23
xtop23's picture

+1 great response and so simple most miss it.

Mon, 09/30/2013 - 12:28 | 4005805 Its Only Rock N Roll
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Spot on.  The bonds can then get rehypothecated out the wazoo.  This is the answer to the "non-tapering" and extraction of  collateral further out of the system right now.  They are worried about a panic due to government shutdown would be my guess.

Boy is this FUBAR and going to end badly. 

Never underestimate the hubris of a central banker thinking they can solve every problem with some tricky little gimmick. 

Mon, 09/30/2013 - 12:45 | 4005892 chdwlch1
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I have always wondered how much the $58 billion (in this case) can be levered up to.  I know that fractional reserve banks can loan out $9 for every $1 in deposits, but what if they loan those $9 to other banks?  Can the "new" loans then be levered again...and again...and again...

What is the total liquidity that can be created with the original $58 billion?

Mon, 09/30/2013 - 12:44 | 4005893 hankwil74
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Please explain further if you don't mind. Doing my best to educate myself on these matters and appreciate simple terms. Thank you in advance.

Mon, 09/30/2013 - 12:55 | 4005944 Riggers
Riggers's picture

All banks are allowed to loan out up to 10x their deposits. IE the money people deposit into their checking and savings. In essence they can create 9x the deposits out of thin air! So say you deposit 1000 at the front counter, they can go in another room and loan out $10k. This is how the banks failed when 2007 hit. They had loaned depositors money out as bad mortgage loans and when the loans did not get paid then banks did not have the liquidity or means to pay people when they demanded their deposits to pay bills or withdraw or whatnot. They had to shutdown and the government stepped in and covered deposits over $100k (singles) or $250k (couples). At least I think that's what it is. I don't worry about FDIC insurance because I don't have any money anyway. lol

Mon, 09/30/2013 - 13:09 | 4005980 Dr. Engali
Dr. Engali's picture

Let's say you have a brokerage account and you are holding some bonds in that account. The firm can then pledge those bonds as collateral to another firm and lever up. You don't know any better because your statement says you still have the same amount of bonds. That's called re-hypothecation. Now let's say you want your bonds at the same time the opposing firm wants the bonds that have been pledged to them. Suddenly your firm is in a pickle because all they have is cash. They have to go some place and get bonds. Well the fed is giving them that place.

Edit. This is a result of the system crash in 08. Everybody had stuff pledged everywhere and nobody knew who owned what or whether or not the pledges could be honored. That's called counter party risk.

Mon, 09/30/2013 - 13:33 | 4006174 Bay of Pigs
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Thus the case for owning physical gold and silver.

Mon, 09/30/2013 - 12:31 | 4005817 ImReady
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I am an idiot but..Isn't this the type of maneuver Lehman used shortly before it's demise? A short term boost to balance sheet making it appear that it was not as leveraged as it was(just long enough to publish financials)? A last ditch effort to appear solvent?

Mon, 09/30/2013 - 12:36 | 4005845 Dr. Engali
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Yes this is exactly what they were doing to make their balance sheet look better.

Mon, 09/30/2013 - 12:39 | 4005859 manhattanexile
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It IS quarter end, so I suspect this is the usual lying...I mean "balance sheet dressing up" that happens.


Guess the issue here is that MORE of this (in $$$ terms) is happening than in prior periods

Mon, 09/30/2013 - 12:43 | 4005877 Unknown Poster
Unknown Poster's picture

EOQ book adjustment, but these are non-banks collecting interest on their cash. Lehman was hiding their over-leveraging, and with new regulations banks don't want to borrow for EOQ reporting. The books will look different in a few days.

Mon, 09/30/2013 - 12:56 | 4005951 Riggers
Riggers's picture

Well since we know what happened when they produce their financials can't one just do the backward figures and figure out what the numbers WOULD have been if not for the reverse repo?

Mon, 09/30/2013 - 12:07 | 4005697 Dr. Engali
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But I was told that there wasn't any liquidity in the system and therefore the fed must print. I think that I've go cross eyed thinking about it.

Mon, 09/30/2013 - 12:22 | 4005775 NotApplicable
NotApplicable's picture

Excess liquidity where you don't need it.

Parched landscape where you do.

Won't anyone think of the poor, central planners?

Mon, 09/30/2013 - 12:31 | 4005815 Quonk
Quonk's picture

Liquidity is high but velocity is in a waterfall:

Good luck getting a loan from Chase or any other TBTFMotherF...they've got it good and they have us right where they want us.

Mon, 09/30/2013 - 12:35 | 4005839 Dr. Engali
Dr. Engali's picture

I know. This reverse repo test says a lot about money velocity. If it ever picks up.... look out.

Mon, 09/30/2013 - 13:14 | 4006058 fonzannoon
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If I just buy the dip I should be fine. This whole thinking thing went out the window 3 years ago.

Mon, 09/30/2013 - 13:36 | 4006185 Bay of Pigs
Bay of Pigs's picture

What's shakin fonz? Never heard that funny story you had.

Mon, 09/30/2013 - 13:18 | 4006077 Seer
Seer's picture

It's nothing more than padding to the books so that the numbers don't require them to shutter.  That is, this is just paper holding them up.  Nothing to be envious of!  They're likely always walking around with brown streaks in their undergarments...

Mon, 09/30/2013 - 12:48 | 4005700 Ham-bone
Ham-bone's picture

Ummm - I thought Fed sold off most or nearly all it's short term debt in Op Twist...silly question but where does the Fed get (buy) unlimited short term debt to trade for cash???  Buying from PD's to sell to others???  Is this truly a reduction of cash or just a handoff???  Thought Fed was very long end heavy???

In principle, is this any different than re-running Op Twist using POMO to buy long end while selling short term debt???  Yeah, yeah Op Twist was using proceeds of short end sales to buy long end but jus saying?  Isn't this jus a variation of what Fed has done before???

Mon, 09/30/2013 - 12:08 | 4005706 Kreditanstalt
Kreditanstalt's picture what's the significance of this?


Mon, 09/30/2013 - 13:01 | 4005978 Spigot
Spigot's picture

1) Any tool created will be used (in this case a tool to pull cash out of banks in exchange for bonds)

2) Notice the increase in test range from 8 billions in test one to 56 billions in test two (clue #2 related to scale expected)

3) It's about control (controlling everything)

4) It's about not letting "markets" determine rates

Mon, 09/30/2013 - 13:33 | 4006137 Spigot
Spigot's picture

This article may be of help, the gist of it ... the FED is running dangerously low on cash ...

Overnight reverse repo operation would give it cash to operate like regular bank that is in trouble ... and since they have plenty of bonds to temporarily pledge as capital ... US bonds they with digital money they created out of nothing ... they can pull cash intro themselves at will if they offer juicy terms ...

Which makes you wonder, as the article above illustrates, just to what kind of shit fest they have invited themselves and all of us.

Mon, 09/30/2013 - 12:51 | 4005707 xtop23
xtop23's picture

There are trillions in FRN's floating around out there.

How can anyone possibly think that they can absorb all of it and avoid an inflationary tsunami of biblical proportions?

Velocity won't stay at zero forever.

$10 trillion dollar FED balance sheet in < 5 years anyone?

Mon, 09/30/2013 - 13:20 | 4006083 Seer
Seer's picture

Velocity straight into a wall... one day it's achieve permanent Zero Velocity.

Mon, 09/30/2013 - 12:12 | 4005710 Quinvarius
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Well.  It isn't like the Fed created some private entities or funded some others using slush money to dump its balance sheet on or anything.  There is legit demand for crashing US debt paper, coming off the wrong end of a historic sovereign debt bubble, while Congress is deciding whether or not to default on interest payments.  The stink you smell should not be investigated.  Or you can just assume that the bankers are having another love affair with toxic garbage that they plan to package up and sell 100x over in derivative form.

Mon, 09/30/2013 - 12:08 | 4005712 tokengator
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Special Report: Pimco shook hands with the Fed - and made a killing

Mon, 09/30/2013 - 12:20 | 4005773 ITrustMyGut
ITrustMyGut's picture

golly..geee... not a single peep..or tweet.. from mr gross..since this story hit...


Mon, 09/30/2013 - 12:21 | 4005777 NotApplicable
NotApplicable's picture

Maybe he's stuck on Fantasy Island?

Mon, 09/30/2013 - 12:10 | 4005717 ejhickey
ejhickey's picture

this isn't a permanent withdrawal of liquidity , is it?

Mon, 09/30/2013 - 13:06 | 4006012 Ham-bone
Ham-bone's picture

It's an overnight repo on the last day of the quarter - the buyers can get their (principle) cash back tomorrow or roll the T's over into another overnight or whatever duration...

Mon, 09/30/2013 - 13:10 | 4006038 the grateful un...
the grateful unemployed's picture

not unless they continue to roll it over, which is how these things work

Mon, 09/30/2013 - 12:12 | 4005725 DrDinkus
DrDinkus's picture

this allows the money market funds to circumvent the PD community and borrow 'high quality' TSY collateral at the juicy rate of 1 bps!


ya, we're screwed

Mon, 09/30/2013 - 12:14 | 4005732 Spaceman Spiff
Spaceman Spiff's picture

I guess they want the shutdown to seem worse than it is....

Mon, 09/30/2013 - 12:17 | 4005743 Sutton
Sutton's picture

There will be a Crash within a week.

Mon, 09/30/2013 - 12:20 | 4005763 kurzdump
kurzdump's picture

Not going to happen.

Mon, 09/30/2013 - 12:26 | 4005790 Spaceman Spiff
Spaceman Spiff's picture

How else do you prove Keynesian policy but by showing any hint of austerity as devastating?

Mon, 09/30/2013 - 12:49 | 4005806 xtop23
xtop23's picture

Sucker bet.

Debt ceiling impasse ( planned ) > 15% crash ( in which all of the connected players will be aggresively short ) > muppets fleeced > connected players informed of imminent "compromise" and they go aggresively long > debt ceiling resolution passed > 10% market rebound > muppets again fleeced.

Ain't "free" markets grand? Excuse me while I lose my lunch.

Mon, 09/30/2013 - 13:25 | 4006119 the grateful un...
the grateful unemployed's picture

keep you eye on the index options, if there is volume on the far out of the money puts the fix is probably in. in 87 this was the case, it was attributed at the time to put SELLERS, who were picking up small premiums (why would you do that in the midst of a raging bull market?) . now there are so many other ways to play the crash, the major problem for the short or the put option buyer is the perceived ability of the seller of the option to pay off on the option at settlement date. i think the best rule in that instance to not be greedy and close the position a little early. its nearly impossible to know if an option sale is initiated by the buyer or the seller.

Mon, 09/30/2013 - 13:34 | 4006175 RaceToTheBottom
RaceToTheBottom's picture

Muppets are asking for it by playing in a game they know is fixed.

Why be a Muppet?

Mon, 09/30/2013 - 12:17 | 4005749 EmmittFitzhume
EmmittFitzhume's picture

TOMO Arigato!

Mon, 09/30/2013 - 12:19 | 4005750 kurzdump
kurzdump's picture

The ECB has withdrawn EUR 756 billion in the last few months.

Mon, 09/30/2013 - 12:19 | 4005751 carbonmutant
carbonmutant's picture

" This is a test, only a test..."

Mon, 09/30/2013 - 12:21 | 4005776 Conax
Conax's picture

Maybe this is analogous to a cleanup after a big fire.

The fire department shows up and hoses everything in sight with newly created funds and they get the fires out.. but there's all this 'water damage' and 'pools' of bernankobux lying about, so they send in the mop up crew to recover it so the evidence of their counterfeiting doesn't litter the streets, and become obvious to the lowly working class.  The $58 bil is just a drop in the bucket, so they would need a bigger mop to really clean it all up.

Just tryin to understand here. 

Mon, 09/30/2013 - 13:20 | 4006082 the grateful un...
the grateful unemployed's picture

maybe this is analogous to looking at your books and seeing you are insolvent and setting a fire in the back room

Mon, 09/30/2013 - 12:23 | 4005782 tarsubil
tarsubil's picture

Why not just make it 0 basis points and call it passing/holding (instead of repo/reverse repo) the hot potato?

Mon, 09/30/2013 - 14:22 | 4006372 Seal
Seal's picture

the ultimate hot potato is the USD. Jim Grant calls it the "Old Maid" of the deck

Mon, 09/30/2013 - 12:26 | 4005793 involuntarilybirthed
involuntarilybirthed's picture

It's getting more complicated as the Fed must now juggle more balls as it tries to keep it all in balance.  Provide for U Sam, protect and feed the banks/lenders, monetize the debt, soak up excess liquidity, lower the balance sheet (by giving it away), avoid deflation, pretend to care about unemployment, carefully leak news and assist in market chaos/volume.  Much to do.

Mon, 09/30/2013 - 12:35 | 4005833 BeetleBailey
BeetleBailey's picture

You or me do this?

Fucking prison.

These Ponzi-Nazi money thinking up and no rules cocksuckers need to be whipped until they have no skin left.

Cunts.....what fuckin robbers and low-life lying scumbags

Mon, 09/30/2013 - 12:43 | 4005871 darteaus
darteaus's picture

Brilliant politics!

Withdrawing liquidity on the day of the "shutdown" is an attempt to tank the markets so the Obamunist can "prove" the dangers of failing to implement his agenda of moar govmint.

Mon, 09/30/2013 - 13:08 | 4006020 orangegeek
orangegeek's picture

and it's POMO renewal day today.


3;00p - don't be late

Mon, 09/30/2013 - 12:43 | 4005885 ITrustMyGut
ITrustMyGut's picture

this is the beginning of the CONTRACTION Phase. Stand for CB's.

expand, expand, expand.... BANG. CONTRACT


rinse repeat

Mon, 09/30/2013 - 12:56 | 4005947 Downtoolong
Downtoolong's picture

My question is, how much of a loss did the Fed effectively take on these collateral sales , considering they were probably purchased at a much higher average price? 

And how does Warren Buffett feel now about the long term prospects for outsized profitability of his favorite mega hedge fund, aka the Fed.

Mon, 09/30/2013 - 13:18 | 4006073 the grateful un...
the grateful unemployed's picture

the fed never SELLS collateral, they buy collateral using fiat created through monetization. the fed buys collateral as a emergency measure only, and they are authorized to buy ANYTHING to liquify the markets and provide stability. once they own distressed property they redefine it as a 'deferred asset.' usually it is written off, or distributed as payment in kind. if you bought a car, or a distressed sovereign bond, from the fed that would be buying their collateral.

Mon, 09/30/2013 - 18:51 | 4007390 RMolineaux
RMolineaux's picture

An interesting observation.  If there were not enough Treasury bonds available for collateralization, the Fed could purchase commercial paper in the money market, or the Treasury could issue its own currency, as it did up to 1960.

Mon, 09/30/2013 - 13:11 | 4006002 the grateful un...
the grateful unemployed's picture

subtract 58b in Reverse Repo from 85B in QE =

the only thing that matters is the QUALITY of the assets. QE is phantom collateral, RR  is real collateral, deposits in money market accounts, bundled and loaned to the Fed for a fixed rate, which is well below the rate of inflation of the money supply. if the test works they could ramp up RR and cutback QE to a point where most or all of their liquidity injections were sterlized. its a miserly effort to steal what real quity there is in the economy. the rational choice for the personal investor (with sweat money in the game) is to buy MOAR GOLD

Mon, 09/30/2013 - 18:45 | 4007372 RMolineaux
RMolineaux's picture

The collateral in both cases is the same: US Treasury bonds.  But your observation about drawing cash from the shadow banking system is on target.  Is the Fed surrendering to the power of unregulated entities?  It would be interesting to see a list of all participants.

Mon, 09/30/2013 - 13:29 | 4006138 Ned Zeppelin
Ned Zeppelin's picture

from a recent Zero hedge article on shadow banking I presume the purpose of this reverse repo operation is to get the sweetest form of re-hypothecat-able collateral, a US Tresury, into the hands of non-banks.  There is a collateral chain effect that is missing as the Fed has soaked up the supply of this collateral via QE.   So think of it as reverse QE, but with a target of non-banks as the market participants. 

Holler if I am missing something. 


Mon, 09/30/2013 - 13:29 | 4006149 Bloodstock
Bloodstock's picture

To the globalist horror let me humbly state that "We The People are sick of your shit! We're not as dumb as you think we are!" And I think that this covers the attitude of 99% of the People. No shit, even the dumbed down are sick of the shit!!!

Mon, 09/30/2013 - 13:45 | 4006229 silverserfer
silverserfer's picture

so you can just print the money that the government runs on? fascinating. Its amazing what you can do with smoke and mirrors these days. Run the whole damn country!

Mon, 09/30/2013 - 14:55 | 4006521 rustymason
rustymason's picture

I guess it can just go on like this forever.

Mon, 09/30/2013 - 17:54 | 4007272 Burticus
Burticus's picture

I feel obligated to point out that the captioned wave is Teahupoo (pronounced "cho foo"), the gnarliest wave on the planet.  It breaks at 20+ feet in a barely-makeable freight-train barrel over a very shallow coral reef in Tahiti.  Every wave is a "tube or die" situation.  (Tyler really knows his $#!+, since generally only surfers know about the place.)

If you dare, do a search for Teahupoo on YouTube to see videos of what will happen to the (not really) Federal (with no) Reserve and their insolvent zombie bank shareholders when they make the slightest miscalculation with their central planning.

For lazy fight club members, here's one video of a pretty big day:

Mon, 09/30/2013 - 18:38 | 4007357 RMolineaux
RMolineaux's picture

It is interesting that the Fed accepted all bids in this "test."  Apparently they are encouraging maximum participation beyond their obligated market makers for when the real thing is activated.

Mon, 09/30/2013 - 18:54 | 4007399 RMolineaux
RMolineaux's picture

I would not be surprised if the upcoming test of the RR plan figured into the Fed's decision to not taper two weeks ago.

Mon, 09/30/2013 - 20:05 | 4007669 Rudini
Rudini's picture

Are you kidding me? So let me get this straight: the FED more or less gives the money center banks liquidity; the bank held assets continue to vaporize; then the FED gives the banks gobs of good assets in exchange for the ~free liquidity? Soooo, it's like getting free assets. OK then....


Who's with me that the taper scare with some 40% loss in the 10 year note was a fakeout so weak hands would have to give up their govies only so the govies would be given to the money center banks as assets? That's what it looks like to me.

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