The fear of a year-end liquidity crisis is leading to a deluge of overnight repo operations.
As Treasury issues more and more debt, The Federal Reserve is snatching it up. Or as Lee Adler found, since September 90% of Treasury issues have been absorbed by The Fed.
Here is Lee’s graphic showing the increase in Treasury debt and the 90% absorption by The Fed.
This is know as “debt monetization.” Essentially what is happening in Japan.
Treasury Secretary Steven Mnuchin meeting with Fed Chair Jerome Powell to discuss Federal debt monetization.