Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

Federal Reserve Considers Creating a Separate Entity for Cash Injections

While American President Donald Trump wages war with Iran, the U.S. Federal Reserve has continued to inject fresh capital into the hands of private banks by giving them $100 billion in overnight and 14-day repos on Tuesday. The same day, Rabobank strategist Philip Marey predicted the central bank will reduce interest rates to zero in 2020. Additionally, former Fed researchers believe the central bank needs to create a “standing repo facility” so private financial institutions can convert securities into fresh fiat reserves whenever they please.

Also Read: Money and Democracy: Why You Never Get to Vote on the Most Important Part of Society

Federal Reserve Injects Another $100 Billion Into the Hands of Commercial Banks, While Analyst Believe Interest Rates Will Be Slashed to Zero

At the moment, most of the world is focused on the escalated tensions between America and Iran. Since the Iranian leader Qassem Soleimani was droned by American forces, safe-haven assets – precious metals like gold, oil, and cryptocurrencies have jumped in value significantly. Following Soleimani’s funeral, Iran launched a few missiles which further escalated tensions between the two countries. Meanwhile, as people pay attention to war games, the U.S. Federal Reserve has been stimulating a wide variety of private banks’ liquidity like there’s no tomorrow. Every time emergency repo operations take place, the New York Fed cites a significant demand for liquidity and a lack of cash reserves. Private banks and bond dealers have continued to pledge their treasuries as collateral for cash nearly every few days for the last four months.

Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News
The Fed’s overnight repos increased dramatically in mid-September 2019 and the cash injections have continued into 2020.

On January 7, the Fed pumped close to $100 billion into the hands of smaller financial institutions by leveraging $63.9 billion in overnight repos and $35 billion for 14-day repos. So far, since September 2019, the Fed has managed to stimulate private banks with trillions by using repo processes and slashing interest rates with a number of monetary easing practices. The Fed is not the only central bank playing the fiat roulette game, as a majority of global central planners are following the Fed’s patterns. Since the first week of November 2019, more than 37 central banks worldwide participated in stimulus and easing schemes. The Fed has cut interest rates a few times since September, but now the entity acts as if it’s reluctant to cut rates again. However, Rabobank executive Philip Marey believes the Fed will drop the interest rate hammer to zero by the year’s end. Moreover, members of the Fed believe the monthly schedule of repos is not enough to appease the faltering U.S. economy.

Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

Creating a Standing Repo Facility So Banks Can Convert Securities for Cash Any Time They Want

While other central banks discuss controversial easing topics like ‘helicopter money,’ former members of the Fed have different ideas. During the last quarter of 2019, it was quite noticeable that the Fed increased monetary interventions a great deal. During a meeting held on December 10 and 11, Fed officials discussed the implementation of a standing repo facility. The facility would be another arm of the U.S. monetary system by allowing banks and bond dealers to swap securities for cash whenever they are in need. “Among the topics mentioned was the potential role of a standing repo facility in an ample-reserves regime, the setting of administered rates, and the composition of the Federal Reserve’s holdings of Treasury securities over the longer run,” explains the Federal Open Market Committee’s transcript. Because a standing repo facility is non-existent, the Fed announces repo offerings every month so dealers can get advance notice.

Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

Following the Fed discussion about a standing repo facility, former New York Fed chair William Dudley also wrote about the subject in an opinion column. Dudley’s editorial basically says the Fed needs to galvanize a monetary easing scheme in the form of a standing repo. The essay noted that the autumn rate spike “reflects the difficulty in forecasting the demand for reserves given the changes.” Dudley stressed:

[The Fed] should create a standing repo facility that is open to a broad set of counterparties confined to Treasury and agency mortgage-backed securities collateral. Such a facility would effectively cap repo rates. It would also address the potential problem of the Fed providing liquidity to primary dealers but primary dealers not lending the funds to other market participants that might need short-term repo financing.

The Everlasting Conundrum: Who Owns the Fed?

The standing repo facility would let borrowers convert securities quickly and whenever they want. Markets Insider columnist Ben Winck notes that JP Morgan analysts would love to see this type of facility implemented. For decades now, the Federal Reserve board members have always claimed that the Fed system is “not ‘owned’ by anyone.” However, the reason JP Morgan analysts like the Fed’s monetary easing policy is because they control the Fed to a degree. Stockholders have controlled the consortium of modern central banking since its inception during the 17th century. Despite what the NY Fed writes, the entity is owned and controlled by the 12 Federal Reserve Banks that serve specific regions within the country. The 12 banks based in San Francisco, Kansas City, Missouri, Richmond, Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas sell shares to thrifts and commercial banks residing in the district.

Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

The same financial families involved with the ‘money trust’ (House of Morgan) still control today’s most powerful commercial banks. The same banking families leverage a portion of command of each Fed branch as well. For instance, in 1983 the NY Fed’s top stockholders included Citibank, Chase Manhattan, Morgan Guaranty Trust, and Bankers Trust Company. As of November 2019, the largest shareowners (same families) of the NY Fed include JP Morgan Chase, Citigroup, Goldman Sachs, Morgan Stanley, and Bank of New York Mellon. Throughout other regions of the country, commercial banks control other Fed branches like Bank of America is a giant stockholder in Richmond, State Street has mega shares in Boston, and Wells Fargo runs the biggest game with the Fed in San Francisco. It’s almost as if the 12 branches of the Fed are already acting as separate standing repo facilities and the Fed wants to divert attention elsewhere.

What are your thoughts in regards to the $100 billion injected into the hands of thrifts and commercial banks yesterday while Donald Trump wages war with Iran? What do you think about Rabobank Philip Marey’s prediction about interest rates being cut to zero? What do you think about the concept of a standing repo facility so banks can convert securities into cash whenever they please? Let us know what you think about the central bank’s monetary schemes in the comments section below.


Image credits: Shutterstock, Pixabay, Wiki Commons, Fair Use, and Twitter.


Did you know you can buy and sell BCH privately using our noncustodial, peer-to-peer Local Bitcoin Cash trading platform? The local.Bitcoin.com marketplace has thousands of participants from all around the world trading BCH right now. And if you need a bitcoin wallet to securely store your coins, you can download one from us here.

Share this story:
Tags in this story
12 Fed Banks, 37 central banks, Bailouts, Banking Families, Bitcoin, bitcoin cash, Central Banks, Cryptocurrencies, End the Fed, Fed, Fed Shares, Federal Reserve, FOMC, gold, history, House of Morgan, JP Morgan analysts, Monetary System, Money Trust, nation states, NY Fed, OIL, Philip Marey, Quantitive Easing, Rabobank, shareowners, stockholders, William Dudley
Related
Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

Chinese Government-Backed Institute Releases New Ranking of 37 Crypto Projects
NEWS | Kevin Helms

China’s Center for Information and Industry Development has published its latest crypto project ranking — the first this year. A… read more.

Federal Reserve Considers Creating a Separate Entity for Cash Injections - Bitcoin News

Major HSBC Layoffs: 35,000 Job Cuts and Massive Restructuring Announced
NEWS | Kevin Helms

Banking giant HSBC has unveiled a major restructuring plan that includes 35,000 job cuts. The move came as the bank’s… read more.

Jamie Redman

Jamie Redman is a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code, and decentralized applications. Redman has written thousands of articles for news.Bitcoin.com about the disruptive protocols emerging today.

Добавить комментарий

Ваш адрес email не будет опубликован. Обязательные поля помечены *