Federal Reserve Is Working on ‘New Tools, New Paths to Liquidity’ To Forestall a Blowout

Jan. 15, 2020 (EIRNS)—The Wall Street Journal reported yesterday that the Fed had added $82 billion to the financial markets on Jan. 14, and announced that it would extend its plans to keep intervening in the markets into mid-February. The worried article continued: “Big banks’ demand for longer-term Federal Reserve liquidity flared up again on Tuesday.... The Federal Reserve Bank of New York said it intervened twice via repurchase agreements, or repos.... Collectively, the Fed added $82 billion in temporary liquidity to the financial system.”

As of Jan. 9, the Fed’s total balance sheet stood at $4.11 trillion, up from $3.8 trillion in September—clear proof that the suicidal policy of quantitative easing has resumed, with a vengeance. Even more ominous are the “new tools” that the Fed may unleash next. According to the Journal,

“The Fed had initially planned to end its repo interventions at the end of the month, but continuing issues in money markets have extended the horizon for the effort. Some on Wall Street think the repo operations could continue into the early summer. Meanwhile, the Fed is weighing other options, like the adoption of new tools or new paths to liquidity, as a longer-term solution.”