This page has been archived and commenting is disabled.

WTF Chart Of The Day: Fed Soaks Up Record $200 Billion In Year End Excess Liquidity

Tyler Durden's picture


A week ago the Fed announced its latest expansion to its Fixed-Rate Reverse Repo facility, which boosted the maximum allotment per counterparty to a whopping $3 billion from $1 billion (initially this was "only" $500 million), to wit: "this week the Committee authorized the Desk to modify the terms of the exercise.  The maximum allotment cap will be increased to $3 billion per counterparty per day from its current level of $1 billion per counterparty per day, effective with the operation on Monday, December 23, 2013." Some wondered why. Today we got the answer, when the Fed announced that an unprecedented $198 billion (that's 20% of a trillion) among 102 entities was reverse repoed to it (an average of just under $2 billion per counterparty) in what can only be characterized as the most grotesque temporary open market operation conducted by the Fed in history.


We will leave it up to readers to decide what is more surreal: that the Fed is allowing banks to "window dress" to the tune of several times more than total Treasury holdings owned by the Primary Dealers as disclosed by the Fed, or that there is an unprecedented $200 billion in free liquidity floating out there.


And yes, nobody actually ever had to sell anything to hand over the fungible electronic cash equivalents to the Fed because... the magic of repo and shadow banking rehypothecation of claims. Remember: $2.5 trillion in excess deposits serve as dry powder to chase risk higher purely in the form of initial margin on marginable securities like the E-Mini, and no money every actually changes hands.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 12/31/2013 - 13:41 | 4288772 spinone
spinone's picture

If the economy is recovering, why does the FED have to intervene so much?

Tue, 12/31/2013 - 13:40 | 4288777 Xibalba
Xibalba's picture

I think you answered your own question 

Tue, 12/31/2013 - 13:47 | 4288795 nope-1004
nope-1004's picture

The FED is the market, because nothing else exists.  Consumers are strapped, credit is saturated, demographics pushing unfunded liabilities to the brink.  The entire ponzi is the FED and Bernocchio is leaving because he knows what's coming.

From Silver Doctors today:  Who controls the US media?  This shows how desperate the consumer economy has become.


Tue, 12/31/2013 - 14:03 | 4288869 DoChenRollingBearing
DoChenRollingBearing's picture

Your comments match the anecdotal stories that I see and hear.  Except for the wealthy NO ONE among the people I know has much money to spend.

Yet the malls are crowded...  Someone resolve that one for me.

Tue, 12/31/2013 - 14:09 | 4288895 Grande Tetons
Grande Tetons's picture

I keep telling my wife things are tough. She still goes to the mall and spends MUCH less than she used to.  

I convinced her that buying Gold and Silver were a better idea than bling. No divorce in my future. 


Tue, 12/31/2013 - 14:31 | 4288982 Beam Me Up Scotty
Beam Me Up Scotty's picture

"She still goes to the mall and spends MUCH less than she used to."

Thats what YOU think.  She's probably got some cashflow going on the side that you are unaware of.  Pole dancing?  Sugar Daddy?  Its hard for women to actually restrain themselves when they are shopping.......I just HAVE to HAVE IT!!

Tue, 12/31/2013 - 14:40 | 4289019 Grande Tetons
Grande Tetons's picture

Good point.  

Guess I need to put some cash aside for a chastity belt. 

Tue, 12/31/2013 - 14:45 | 4289035 Alternative
Alternative's picture

If she was born and educated in Merka, forget about that fantasy. In any case, won't last.

Tue, 12/31/2013 - 14:10 | 4288896 NotApplicable
NotApplicable's picture

Next "New Normal?"

Tue, 12/31/2013 - 17:13 | 4289488 Crash Overide
Crash Overide's picture

Stay tuned, later in the show they should try to ram through some more planet killing legislation or a new executive order to keep us all safe of course when the house of cards they built falls down.

Happy New Year's fellow slaves, drinks on on the FED tonight and you can count on a hangover.

Tue, 12/31/2013 - 19:24 | 4289791 max2205
max2205's picture

Tightening...sureeeee.....4 days of Pomo taken back

Psst.... Hold on to 200 billion cause we are repo'ing it back.....BenYellen

Tue, 12/31/2013 - 14:11 | 4288903 Stackers
Stackers's picture

I was wondering what was happening with the reverse repo system they were "testing" this fall and winter.


This is the mechanism for them to feed repo'able securities back into the market, so it's a big deal. i was expecting this increase sooner, with much more to come.

Tue, 12/31/2013 - 18:31 | 4289690 jughead
jughead's picture

credit cards, baybee!

Tue, 12/31/2013 - 18:57 | 4289749 atomp
atomp's picture

and EBT cards

Tue, 12/31/2013 - 14:03 | 4288858 ZH Snob
ZH Snob's picture

hey, Ben, please don't squeeze the Charmin.

Tue, 12/31/2013 - 14:53 | 4289048 bwh1214
bwh1214's picture

Help!!!  I do not understand the mechanism through which the fed “soaks up” excess liquidity.  I can understand that the fed can sell bonds on its balance sheet and soak up liquidity but I don’t understand how they can “soak up” liquidity any other way.  Are they managing to destroy dollars without selling bonds? How?  Confused over here, but I’m sure someone on here can explain it.  If the fed has another mechanism to soak up dollars that doesn’t involve selling bonds my thesis on them being trapped may be off.


Tue, 12/31/2013 - 16:10 | 4289287 bwh1214
bwh1214's picture

Thanks @Fight-Club.  I read the the bloomberg artical and now I understand.  This mechinism is only a temporary measure and really doesn't accomplish anything.  Tinkering more then anything.  The cash will be back in the system in under a month.


Tue, 12/31/2013 - 17:27 | 4289518 Occident Mortal
Occident Mortal's picture

Instead of selling the bonds for cash the Fed is loaning out the bonds for cash.

Tue, 12/31/2013 - 14:00 | 4288856 replaceme
replaceme's picture

What is the expression "when the answer doesn't make sense, maybe it's because you're asking the wrong question"..?

So bullish, I suppose - right until the microsecond before it's not.

Tue, 12/31/2013 - 14:04 | 4288863 slotmouth
slotmouth's picture

Fed Statement

"Like earlier operational readiness exercises, this work is a matter of prudent advance planning by the Federal Reserve. These operations do not represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future."

OK, so they say they are going to end QE by mopping up excess liquidity via RRPs in 2009, then 5 years of QE then suddenly they start to taper followed by massive RRPs and we are just supposed to not read into this?


Thu, 01/02/2014 - 02:31 | 4292635 MeelionDollerBogus
MeelionDollerBogus's picture

What, why not?

I don't see any droids.

Tue, 12/31/2013 - 14:05 | 4288878 fooshorter
fooshorter's picture

Any brave zerohedger want to clarify this to me, I looked it up on investopedia but Im unsure how unsurprised I am suppsoed to be :|

Tue, 12/31/2013 - 14:34 | 4288990 itstippy
itstippy's picture

It's how Washington works.

Congress spends billions subsidizing tobacco farmers and oil companies, then they tax the shit out of the end products to raise revenue to pay for the subsidies, anti-smoking campaigns, and fuel conservation programs.

The Fed conjures up $1T annual in Quantitative Easing to provide needed liquidity to the financial sector; simultaneously, they run reverse-repo programs to mop up the excess liquidity in the financial sector.

Washington has to keep the money flow going so they and their partners can keep raking in the skim.  What the Hell do you want?  Cheap smokes, cheap gas, and honest currency?

Tue, 12/31/2013 - 19:25 | 4289793 max2205
max2205's picture

Cheap gas.....burp

Tue, 12/31/2013 - 15:07 | 4289104 tempo
tempo's picture

Reverse-repo? Is that some new sexual position?

Thu, 01/02/2014 - 02:26 | 4292629 MeelionDollerBogus
MeelionDollerBogus's picture

well what do you think?
Ask yourself if you're being bent over & then ask the previous question again.

Tue, 12/31/2013 - 14:45 | 4289017 Fight-Club
Fight-Club's picture

I suggest reading this article on Bloomberg.  Seems to be a temporary reversal of some of their bond purchases.  Perhaps it helps year-end FED balance sheet reporting?  Without affecting treasury prices/interest rates.  Stem the flow of money into the stock market?  

Tue, 12/31/2013 - 15:19 | 4289149 fooshorter
fooshorter's picture

This helped me


Thanks for all responses.


Based on the bloomberg article, it seems that the flood gates of free liquid money were lent by the FED with no counterpary collateral. Bonus Season! Duck Season! Bonus Season! Duck Season! Bonus Season! Bonus Season! Duck Season! Fire!

Tue, 12/31/2013 - 16:16 | 4289294 Overfed
Tue, 12/31/2013 - 14:46 | 4289038 Max Damage
Max Damage's picture

And there will be bonuses all round for the banker twats on their free gift profits from the FED, at the expense of everyone else

Tue, 12/31/2013 - 13:41 | 4288774 maskone909
maskone909's picture

hello velocity!

Tue, 12/31/2013 - 13:46 | 4288789 beegle
beegle's picture

why do you imply velocity ? how does that affect main street ?

Tue, 12/31/2013 - 13:55 | 4288826 maskone909
maskone909's picture

im no banking expert but it looks like the fed and the primary dealers are bracing for a wave of either inflation or a large jump in rates.  seems like they are trying to jumpstart inflation with minimum wage increases nationwaide, which would require the primary dealers to hold more cash to offset deposits. 

Tue, 12/31/2013 - 14:06 | 4288870 slotmouth
slotmouth's picture

No velocity until they end IOER.

Tue, 12/31/2013 - 14:09 | 4288882 Toolshed
Toolshed's picture

The fed has taken the banks cash in return for "renting" collateral. This would impair velocity I believe. The great lack of velocity of currency the last few years is what has prevented the massive printing from causing rampant inflation on main street. Could indicate a severe "good" collateral shortage in the US, much like what the EU system has been experiencing. But who knows really. Could be the fed would like to get some return on all that printing rather than paying interest on it sitting in bank's reserves on deposit with the fed.

Tue, 12/31/2013 - 14:10 | 4288900 maskone909
maskone909's picture

"Could be the fed would like to get some return on all that printing rather than paying interest on it sitting in bank's reserves on deposit with the fed."

if that is the case, they are playing hot potato with live grenades

Thu, 01/02/2014 - 16:37 | 4292626 MeelionDollerBogus
MeelionDollerBogus's picture

sounds like a cue for Kramer to pop in to explain we're really only playing hot grenades with live potatoes.

Tue, 12/31/2013 - 14:24 | 4288952 SDShack
SDShack's picture

Minimum wage increase along with amnesty for millions of illegals... Summer Recovery 6.0!

Thu, 01/02/2014 - 02:18 | 4292618 MeelionDollerBogus
MeelionDollerBogus's picture

You're all illegal

A real free market doesn't have immigration restrictions. Those anti-market moves are just another kind of price-control on wages by the state - the dream of the Statist to make slave-pens around you and for you to CHEER it instead of wondering why you put up with your slavery.

It is the prison you pretend can not exist so you can't see it

Tue, 12/31/2013 - 14:08 | 4288889 Stoploss
Stoploss's picture

It is why you are broke all the time. I.E. there is none and can never be any. Unless you have 20 bucks for a loaf of bread, and a bike to go get it with if you make it through the guantlet on the way to the store.


Fortunately, we only have three moar years of this left..

Happy New Year.

Tue, 12/31/2013 - 16:09 | 4289280 Overfed
Overfed's picture

Fortunately, we only have three moar years of this left..


And then what? Chris Christie or Shitlery Clitnone are gonna fix it? Right.

Tue, 12/31/2013 - 14:31 | 4288981 tallen
tallen's picture

They're doing it to make their balance sheets look good at the year end. Full of safe AAA US T bills instead of crap.

Tue, 12/31/2013 - 13:39 | 4288776 Debtonation
Debtonation's picture

Does this mean the Repo market is about to break?

Tue, 12/31/2013 - 13:40 | 4288778 666
666's picture

Anything China can do, we can do better!

Tue, 12/31/2013 - 15:29 | 4289178 Pareto
Pareto's picture

.....we can do anything better than China.  there.  finished it for ya. he he

Tue, 12/31/2013 - 13:41 | 4288779 ptoemmes
ptoemmes's picture

Someone is trying to kick 2014 in the ass - or the balls - not sure which.

Tue, 12/31/2013 - 15:42 | 4289206 chdwlch1
chdwlch1's picture

Floating Rate Notes go on sale January 29, 2014...I'd expect interest rates to rise once the PDs are sufficiantly positioned with the new FRNs. 

As far as timing the inevitable collapse goes, the new FRNs are a good gauge, but keep in mind that Operation Twist (long-dated bonds exchanged for 3-5 year bonds) concluded in 2012.  That would mean a collapse in the 2015-2017 timeframe just like many seem to be forecasting. 

Foreign holders of US Treasuries will let their current "twisted" bond holdings fully mature dramatically reducing their exposure to interest rate spikes.  By the time the twisted foreign bonds reach maturity, the big banks should be sitting on a nice pile of Floating Rate Notes.

Just my 2 cents...

Tue, 12/31/2013 - 15:48 | 4289222 quasimodo
quasimodo's picture

"Someone is trying to stick 2014 in the ass "

because it feels more like it to me. A large stick with all sorts of little buds where other twigs were broke off. Inflicting maximum pain and damage.

yeah, oh yeah Ben! Faster! Wait a sec! I hear Janet at the door! 

Tue, 12/31/2013 - 13:44 | 4288782 cmalbatros
cmalbatros's picture

the economy is recovering, because the FED has to intervene so much?

Tue, 12/31/2013 - 13:45 | 4288783 Obchelli
Obchelli's picture

Anything is Bullish...



Whatever anyone say they have total control over market they are winning and from the way things are progressing they are less and less likely to lose it as it will be more and more costly... So they simply can not afford losing...

Tue, 12/31/2013 - 13:45 | 4288787 Osmium
Osmium's picture

Would be nice if they named some of the parties parking cash with the FED

Tue, 12/31/2013 - 13:46 | 4288788 Dr. Engali
Dr. Engali's picture

The fed is printing money to buy bonds that nobody wants and then lending those bonds out to other entities in order to prevent margin calls. You have to admire their creativity when it comes to keeping the ponzi alive.

Tue, 12/31/2013 - 13:50 | 4288798 Tsar Pointless
Tsar Pointless's picture

The logical part of me says that should probably be criminal in nature to do, but the realistic part of me says that this is just standard operating procedure.

Tue, 12/31/2013 - 13:59 | 4288850 DoChenRollingBearing
DoChenRollingBearing's picture

Probably S.O.P., not much is logical anymore.

Tue, 12/31/2013 - 14:57 | 4289072 Pareto
Pareto's picture

+1 Best answer yet Doc. (though all are good).  They have to suppress the 10 yr. in my opinion, and the only way to do that is to mop that shit up to keep prices on the 10 yr up and yields down.  Thats why gold will probably be very positively correlated with interest rates going forward.  The effect is an increased dilution of available collateral as prices for most assets will rise as a result.  Margin debt lives to see another day I suppose, but, sooner or later the time to cover will come, and there will be nowheres near enough collateral available - as it diminishes more and more every day.

Tue, 12/31/2013 - 17:03 | 4289449 formadesika3
formadesika3's picture

-- They have to suppress the 10 yr. in my opinion, and the only way to do that is to mop that shit up to keep prices on the 10 yr up and yields down.

Are the RRPs on the 10 yr? That makes sense if that's what they're doing. Frankly, I didn't understand the rest of your comment.

Tue, 12/31/2013 - 16:21 | 4289311 anomalous
anomalous's picture

Seems like they're increasing liquidity in that case vs. sopping any up? No?

Tue, 12/31/2013 - 19:09 | 4289770 Its Only Rock N Roll
Its Only Rock N Roll's picture

Huge collateral call on interest rate swaps.  The Fed is aiding and abetting the banks so the derviatives bomb doesn't go off....yet.  This is quite the reverse repo operation the past week.  Will anyone take the fed to task on this?  Clearly is contradicting the bullshit Q/E & taper narrative they would like the markets to believe is happening.  The plumbing is backed up and it takes more and more to keep the appearance of normalcy to the masses.  Quite the shitshow.


Tue, 12/31/2013 - 13:46 | 4288792 HUGE_Gamma
HUGE_Gamma's picture

this article is completely misleading.. its NOT 200bn, the actual amount is closer to 197.8bn

Tue, 12/31/2013 - 14:03 | 4288832 Ham-bone
Ham-bone's picture

Yeah...good catch!?!

Also, when no one is sure what "money" really even means any more since none of this "money" is coming from anywhere (no selling of any assets with which to raise the cash the Fed is supposedly soaking up)...who can say what this means.

How could it be there is $200, I mean $197.5 B sitting around in cash to be soaked up???

Tue, 12/31/2013 - 13:54 | 4288794 Occams Aftershave
Occams Aftershave's picture

what does this mean in sorta regular English?   Is the operation allowing banks to hide liabilities, increase assets, what?    "Soaking up liquidity" creates a nice mental picture of the Big Fed Sponge, but what is actually happening?

Tue, 12/31/2013 - 13:57 | 4288825 El Vaquero
El Vaquero's picture

The numbers would indicate that something bad is going on behind the scenes that we don't know about.  $95bn the other day, then $200bn today.  It makes me wonder if the shadow banking system is about to come unwound again. 

Tue, 12/31/2013 - 14:03 | 4288859 DoChenRollingBearing
DoChenRollingBearing's picture

Taking $500 more out of the ATM would be a better thing to do then leaving it in the bank if so.

Tue, 12/31/2013 - 14:04 | 4288873 El Vaquero
El Vaquero's picture

Problem is, those secretive fucks aren't going to tell us what is going on until it breaks.  Maybe whatever is going on will be stopped and we will never know.  I simply cannot say because I am not an insider.  It's just that the numbers are big enough to make me do a double take. 

Tue, 12/31/2013 - 17:29 | 4289523 MachoMan
MachoMan's picture

If you believe noah speaks to god and acts through god's suggestions, then do you need to speak to god to know the earth will flood when you see noah maniacally building an ark?  Further, is the flood likely to come before noah is complete?  Can we gauge the timing of the flood via noah's progress?

Tue, 12/31/2013 - 14:12 | 4288893 Cannon Fodder
Cannon Fodder's picture

Could you give some examples of what those "something bad" things are? (in laymans terms please). - sorry my Economics class was way too long ago to remember this stuff.

Tue, 12/31/2013 - 14:25 | 4288954 Bastiat
Bastiat's picture

They didn't teach central bank secrets in Econ class anyway.

Tue, 12/31/2013 - 14:39 | 4289006 El Vaquero
El Vaquero's picture

Yessir.  As I stated above, I'm not an insider.  All that I can do is look at the numbers and infer that something has changed.  I know, I know, "something" is about as vague as it gets.  But seriously, why this sudden massive ramp up?  Did a bunch of players pledge a bunch of shit that they didn't have on bets that went sideways?  Is the Fed doing something nonsensical trying to manipulate the 10 year? 


Whatever has changed, bankers are involved.  If their past performance is any indicator, it is probably not good for us. 

Tue, 12/31/2013 - 15:00 | 4289070 Citxmech
Citxmech's picture

From Wiki:  A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively representing interest, sometimes called the repo rate. The party that originally buys the securities effectively acts as a lender. The original seller is effectively acting as aborrower, using their security as collateral for a secured cash loan at a fixed rate of interest.

A repo is equivalent to a spot sale combined with a forward contract. The spot sale results in transfer of money to the borrower in exchange for legal transfer of the security to the lender, while the forward contract ensures repayment of the loan to the lender and return of the collateral of the borrower. The difference between the forward price and the spot price is effectively the interest on the loan, while the settlement date of the forward contract is the maturity date of the loan.A repo is economically similar to a secured loan, with the buyer (effectively the lender or investor) receiving securities as collateral to protect him against default by the seller. The party who initially sells the securities is effectively the borrower. Almost any security may be employed in a repo, though highly liquid securities are preferred as they are more easily disposed of in the event of a default and, more importantly, they can be easily obtained in the open market where the buyer has created a short position in the repo security by a reverse repo and market sale; by the same token, non liquid securities are discouraged. Treasury or Government bills, corporate and Treasury/Government bonds, and stocks may all be used as "collateral" in a repo transaction. Unlike a secured loan, however, legal title to the securities passes from the seller to the buyer. 

Tue, 12/31/2013 - 15:08 | 4289092 kchrisc
kchrisc's picture

Ah, Bastiat, you always make me think of this:

"But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime."

Tue, 12/31/2013 - 13:47 | 4288797 gdpetti
gdpetti's picture

That comparison chart to the '29 crash is looking very 'comforting', especially as it comes just around earnings season... Fa, la, la, la, la.

Then trigger the mass MC crisis and wait for Mother Nature to do the rest. Perfect? or is this an example of the horse running away with the cart again? Seems the drivers never realize the reins never were in their hands.

Tue, 12/31/2013 - 13:53 | 4288811 nmewn
nmewn's picture

The Fed has a BitWallet, the shit just comes out of nowhere!

(Sorry, I couldn't resist)

Tue, 12/31/2013 - 13:54 | 4288822 lead salad
lead salad's picture

Meh, this is no big deal....Miley will be a twerkin' tonight on ABC's New Year's Eve celebration!.....Bread and Circuses.....

Tue, 12/31/2013 - 14:26 | 4288962 Bastiat
Bastiat's picture

Is there a donkey involved?

Tue, 12/31/2013 - 13:56 | 4288834 GolfHatesMe
GolfHatesMe's picture

almost $400B in last three days!

Tue, 12/31/2013 - 14:12 | 4288898 Black Forest
Black Forest's picture

They need money to buy firecrackers.

Tue, 12/31/2013 - 15:18 | 4289134 Keyser
Keyser's picture

Or more ammo.

Tue, 12/31/2013 - 14:04 | 4288871 darteaus
darteaus's picture

So, nobody wanted UST but the Fed?  Gee, I wonder how this will end...

Tue, 12/31/2013 - 14:38 | 4288998 SDShack
SDShack's picture

It will end with the Fed controlling 51% of the bond market, to neutralize the bond vigilantes. They have to do that to avoid the EU fiasco from coming to the USA. When the bond vigilantes are neutralized, liquidity will only have 2 buckets to flow to... hard assets/property, and equities. Then it's TPTB target one after the other for the old Pump & Dump scheme to take every asset from the sheeple and redistribute it to the elites. It's the New Feudal Order, with Kings/Queens running the whole world, Lords running their estates from gated communities, Serfs living in Potters Slums rented from the Lords & Kings/Queens, and Chaff confined to FEMA camps and demilitarized inner city zones like Detroit. Plan accordingly.

Tue, 12/31/2013 - 15:37 | 4289202 darteaus
darteaus's picture

Hmmm...I need to become an elite.

Tue, 12/31/2013 - 15:46 | 4289213 SDShack
SDShack's picture

You have to be a sociopath to join that club. But it's the only requirement.

Tue, 12/31/2013 - 17:53 | 4289592 MachoMan
MachoMan's picture

You wish...  not only does it take an incredible penchant for pursuing self interest, but it takes an incredible amount of skill...  aside from the fact, it's the kind of club that's invitation only, even if you manage to hit it big with an invention or two.

Tue, 12/31/2013 - 21:10 | 4290012 SDShack
SDShack's picture

Skill is a relative term. In your world, John Corzine probably meets all your criteria. In my world, he is just a sociopath.

Tue, 12/31/2013 - 14:11 | 4288886 One And Only
One And Only's picture

What would you rather be... Congress creature that can insider trade or stock savvy NSA analyst that undoubtedly spies on Fed members? If you're an the NSA analyst couldn't you sell that info to foreign governments without breaking any laws?

Tue, 12/31/2013 - 14:31 | 4288967 Bastiat
Bastiat's picture

If you are an NSA analyst you can't say anything about anything classified (which is everything) to anyone outside of work without breaking laws. 

Tue, 12/31/2013 - 15:10 | 4289102 donsluck
donsluck's picture

Not a stretch to assume say 5% would find a way to get a big enough payout to run to say...Costa Rica?

Tue, 12/31/2013 - 14:14 | 4288899 OldE_Ant
OldE_Ant's picture

Can the FED soak up some anal liquidity too??

I mean there are lots of old fogies like me with leaking stool valves that need some liquidity sopping.  Twice per day should do it.

200B in one fucking month are you kidding me?  That ups the overall rate to 2.4T a year to float this farsical turd called 'the markets'.



Wed, 01/01/2014 - 21:24 | 4292143 MeelionDollerBogus
MeelionDollerBogus's picture

well if you can't taper it, they sure can't show you how, according to these numbers!

Tue, 12/31/2013 - 14:12 | 4288911 BurningFuld
BurningFuld's picture

It's like you go to Vegas and each time you lose you double your bet. If you have infinite money like the bankers via the Fed you can keep doubling your bet each time you lose until you crush the other party.

That's how I see it anyhow.

Tue, 12/31/2013 - 14:18 | 4288922 Yen Cross
Yen Cross's picture

 $198 billion X 30 days in month = almost $6 trillion .  The Fed has now officially landed on the surface of the sun!

Tue, 12/31/2013 - 14:18 | 4288925 STG5IVE
STG5IVE's picture

2014 Economic Report of the President has been released early

Tue, 12/31/2013 - 16:11 | 4289282 anomalous
anomalous's picture

Thanks for that, can only hope for that quality of reporting in the future.

Happy New Year!

Tue, 12/31/2013 - 14:24 | 4288939 Caveman93
Caveman93's picture

O'MOP? POMO in reverse!?

Tue, 12/31/2013 - 17:22 | 4288963 evernewecon
evernewecon's picture





Combine this



with this


and I dare you to make any predictions.


Keynesians who prefer democratically functioning

markets can agree with this (as opposed

to privatized policy making.  Keynesians

with an honest attitude toward the broader

public would oppose what Keynesians lacking

that attitude would do.)


and this.




I'm thinking where a central bank's 

largesse is likeliest to cause the

greatest asset inflation is actually

Japan's stock market simply because

stock investing therer has been even

more plutocratic in its process of 

operation than it's been here (the 

many asset price manipulations that

have come to light aside.)


In particular, till recently, people

could only invest in very large blocks,

effectively leaving it in the hands of

the plutocrats, with Avon-style retail

brokerage aimed typically at housewives,

investing in retail investor pools.


Naturally, the chain of investment so

constructed should more efficiently 

direct where the financial deciders 

want the funds to go.


It's a shame, though, that our mortgage

bubble siphoned from their recovery

by way of the Icelandic carry trade.


This is literally as from out of

SNL's the Pepsi Syndrome (Three

Mile Island) skit.






Tue, 12/31/2013 - 14:27 | 4288964 ChaosEquilibrium
ChaosEquilibrium's picture

Cause and Effect!


1.  Chinese defaults/repo market?

2.  Draghi's OMT a REAL DREAM?

3. US Statistical manipulations catching up with Shadow Banking?

4. A few US Hedge Funds....bite the bullet on Yen? Euro?

5. Italian government/Banks going belly up Thursday?

6. China/Japan literally stop buying T's?


This sucking of collateral and liquidity is ABNORMAL.....something big is going down?  Any thoughts or anyone hearing anything unusual in their region of the World?

Tue, 12/31/2013 - 14:41 | 4289016 fuu
fuu's picture

That was after the 110 billion dollar one yesterday. So $95B on Friday till Monday, $110B from Monday to Tuesday, and $198B till Thursday. The amount keeps going up.

Tue, 12/31/2013 - 14:56 | 4289058 jldpc
jldpc's picture

So much claptrap. The "banks & brokers" er thieves, have so much "excess liquidity" their friends at the fed helped them earn a little to improve their botttom lines before year end, to...... boost their bonuses, make up for their "criminal penalties" paid for wrongdoing of many kinds albeit at about 0.0000001 cents on the dollar. But most clearly to see - they have no one to lend it to..................... or it would not be excess would it. Why is that? Because the mortgage market fell out of bed. So let us watch and see what happens to said cash (hah! paper entries) when the repos undo. Where will the liquidity go next???? Any body care to guess?? 

Tue, 12/31/2013 - 16:03 | 4289259 fuu
fuu's picture

Is the rate paid on reverse repo's sterilized?

Wed, 01/01/2014 - 21:17 | 4292046 MeelionDollerBogus
MeelionDollerBogus's picture

As well as a hooker on M street, you got 'er.

Tue, 12/31/2013 - 14:59 | 4289080 kchrisc
kchrisc's picture

What ever is going on can only involve a shaft.

"I see guillotines in the future."

Tue, 12/31/2013 - 15:20 | 4289137 Clowns on Acid
Clowns on Acid's picture

Yeh.. nothing terribly unusual except that institutions other than the primary dealers, can now transact repos with the Fed directly. The primary dealers probably don't mind that the institutions going around them directly to the Fed for short term repo because the numbers are large and the market could be volatile given that no one really trusts single name liquidity.

The Fed has bought up so many oif the MBS and 10 yr UST's that a lot of the Mutual funds running the money market funds cannot get good repo rates because of a lack of collateral in the repo market. The Fed's answer to this is to allow those institutions to come directly to Fed window and the Fed will either print the cash for them or provide soe collateral for rehypothification of their portfolios.

"It's a complicated web you weave, when you start out to deceive"     The only "risk" I can see is that the liquidity gets lent out to the general public. Right now only those with access to shadow banking markets are the beneficiaries of Fed zero interest rates liquidity. Therefore... stawks, real estate, paper profits, and fuck you if you actually produce or build something for a living. That doesn't help the banks... so get back to work and STFU. 


Tue, 12/31/2013 - 15:25 | 4289160 fijisailor
fijisailor's picture

So will this help the 10 year tank in the new year?  If so I see an economic crash and then a reversal and increase in QE.  The dollar is under pressure so the FED is trying to restore confidence?  A bit late for that.

Tue, 12/31/2013 - 15:24 | 4289168 orangegeek
orangegeek's picture

so where's the opportunity in this????


long volatility - VXX - it's going to the moon when the market tanks.


$200B in one day.  LMFAO!!!!  Do it again uncle Ben, do it again.   Weeeeeeeeee!!!!!

Wed, 01/01/2014 - 21:06 | 4291854 MeelionDollerBogus
MeelionDollerBogus's picture

try again:

vxx : -4x inverse to spy,dia,qqq (previous to most recent reverse-split 4:1)

hvu : -11x inverse to same, a multiplier to vxx

VXX is on nyse & tsx

hvu is only on tsx , generally I'm seeing around 16471/75 = HVU 1/11 x SPY

as the numbers fluctuate you could even put in 200 instead of that fraction but the fraction fits more than a year of data looking back. LAST DAY I saw both go up at once, HVU and SPY, so as it turns out the constant that snaps out of the math is 221.464470316 but as you may well be aware, sometimes leveraged ETF's don't move in the intended direction as the market every single day without fail. FAS has gone down with SPY, S&P500, DOW up, FAZ has gone down with the market down, VXX has done that or up with market up, and so on.

For Tue 2013 dec 31 vxx went down while hvu went up, opposite to the direction it normally would go. Some of that may have been currency fluctuation given it's in CAD, but it looks like the past 3 days, not 1 trading day, really hit the +1 % for USD/CAD. Given the lag I'm not sure if it's yet proper to attribute that as a factor.

Tue, 12/31/2013 - 15:29 | 4289180 cdm
cdm's picture


"unprecedented $198 billion (that's 20% of a trillion)"


so, this is not your grandfather's fifth of liquid?


ugghhh ...


bar-keep, i will take the rye whiskey; make it straight a double.

Tue, 12/31/2013 - 15:36 | 4289192 Kelley
Kelley's picture

That line sure looks ominous.


After reading the definition, I sincerely wish I understood what reverse repos are all about. 


In any case, the line is all out of whack.

Tue, 12/31/2013 - 15:59 | 4289249 chistletoe
chistletoe's picture

um, so what, exactly, are you doing in the mall?

Tue, 12/31/2013 - 16:30 | 4289350 Paracelsus
Paracelsus's picture

Auto Industry-----Unprotected thru trade barriers,folds. City of Detroit goes under when they can't sell anymore debt paper.  Detroit real estate values crater. Market works,price discovery happens. City pensioners are bailed-in at ten cents on the dollar.

New York------Finance Industry.  Make good bets,keep da money.Make bad bets,FED backs you up,socializes losses.Manhatten real estate prices protected.No price discovery.

If market is left alone,price discovery will happen.If real estate values tank,then the ability of the City to finance operations by taxation is impaired,and future forecasts must be adjusted accordingly.

Deleverage slow,soft-ish landing. Deleverage fast,BUST....

Tue, 12/31/2013 - 16:44 | 4289395 The Econ Ideal
The Econ Ideal's picture

This "mop up of excess liquidity" is a drop in the bucket. These TOMOs are window dressing for showing the Fed can respond to acute spikes in inflation, when they happen. 

Wed, 01/01/2014 - 20:59 | 4291841 MeelionDollerBogus
Tue, 12/31/2013 - 16:59 | 4289435 Rubbish
Rubbish's picture

Banks are just swapping their cash for bonds with the feds to make their year end statements stronger. All year they have been boosting cash reserves for an economic crisis that didn't happen. They get the cash back in a few days, not a big deal imo, just shows how serious they are at hording cash of late.

Tue, 12/31/2013 - 18:17 | 4289646 lotsoffun
lotsoffun's picture

 it's the rehypothecation game.  they all need treasury's to hand back to the counterparties, and if there aren't enough treasury's around, the price goes up.  so bernake was right.  it will be easy to mop up all the cash going around.  if the counterparty gave you treasury's and you gave him cash, you can't give him cash back.  cash doesn't earn interest.  bernake is a fcking genius.  i doubted him for so long.


Tue, 12/31/2013 - 17:30 | 4289524 saveandsound
saveandsound's picture

That's just the end-year window-dressing. Altough with quite a lot of money.

Tue, 12/31/2013 - 17:52 | 4289578 Lmo Mutton
Lmo Mutton's picture

"We are going to need a bigger chart."

Thu, 01/02/2014 - 16:49 | 4291791 MeelionDollerBogus
MeelionDollerBogus's picture

Soaking up extra $200 billion, "un"printing aka tapering aka LOL $10 billion per month.

Nobody does math like the Fed... NOOOoooooBUUUUUUdy!

That's only 20 months' worth of un-tapering going with "tapering". What did I say... we'll "taper down from 85 billion/month to 130 billion/month!"

hey wait, isn't that...

(shut up, these media knobs can't do math)

.... okay Boss....


Thu, 01/02/2014 - 03:56 | 4292661 Youri Carma
Youri Carma's picture
Yeah, those REPO deals sigh …. infamous! But what does a Muppet know? Infamous for it’s ‘Window Dressing’ qualities according to the banksters because they like to use it a lot for all kinds of balance rigging purposes even in taxpaying cases when they all conveniently, most suddenly made a loss. And triple accounting can be so tiresome sometimes and that’s why They do deserve to higher-up all their bonuses, according to these self proclaimed ‘Masters of the Universe’ because without them the Universe collides on itself, they say. Yeah, sure … Today The Fed Soaked Up A Record $95 Billion In Excess Liquidity Sloshing Around

Peek-A-Boo Accounting and the Crash of Financial Stocks on Wall Street

9 July 2008, by Max Keiser (The Huffington Post)

Intentionally misleading people by hiding money from public scrutiny in order to grossly leverage it’s balance sheets and hide enormous risk taking, on public, taxpayers account mind you, only for personal profit is a travesty called FRAUD!

Regardless which “vehicle” or accounting gimmick is used cause REPO 105 is nothing more than a vehicle used to commit FRAUD!

FROM: Youri Carma: It ain’t “Window dressing” anymore but it’s called “FRAUD” in collusion “RECO”, 26 January 2011, by Youri Carma (FPP)

Thu, 01/02/2014 - 10:45 | 4293026 resurger
resurger's picture

Tyler .. all of this for the sake of DOW 36K!






Thu, 01/02/2014 - 10:49 | 4293028 resurger
resurger's picture


Do NOT follow this link or you will be banned from the site!