Prepare for a heart-pounding journey as we delve into the unnerving world of the Federal Reserve’s balance sheet explosion! Wall Street is trembling as the latest bank crisis unravels, drawing everyone’s focus to the Federal Reserve’s weekly H.4.1 update. Brace yourselves for the astonishing revelations ahead.
Record Discount Window Surge
In a jaw-dropping turn of events, for the week ending March 15, borrowings under the Federal Reserve’s Discount Window – a last-ditch liquidity lifeline – blasted to an unprecedented $152.85 billion. This staggering $148 billion weekly increase surpasses even the darkest days of the financial crisis!
Limited Usage of BTFP Facility
With bated breath, observers awaited the usage figures of the Fed’s new BTFP facility, only to discover a meager $11.943 billion. It appears that banks are haunted by the stigma associated with this program, preferring to seek alternative funding sources before daring to approach the BTFP.
The Broken Banking System
As these two facilities intertwine, they reveal a banking system teetering on the brink of chaos. Over $100 billion in deposit migration has surged in the wake of the catastrophic failures of Silicon Valley Bank of California and Signature Bank of New York.
The Fed’s Balance Sheet Expansion
Amidst this turmoil, the Federal Reserve’s balance sheet has swelled by a colossal $297 billion, marking the most significant increase since April 2020. This massive expansion effectively eradicates four months of quantitative tightening, annihilating half of the entire program.
Despite JPMorgan’s Nick Panigirtzoglou predicting that the Fed’s new BTFP facility could soar to a staggering $2 trillion, serving as a Stealth QE, the current pace of $11 billion per week leaves us on the edge of our seats, as we wait for the potential storm to unfold.
In these gripping times, the Federal Reserve finds itself in a high-stakes game, raising interest rates, shrinking its balance sheet, and covertly engaging in Stealth QE to rescue smaller banks from the clutches of financial ruin. As deposit flight rages on, the Fed’s balance sheet is destined to keep growing. Hold on tight as we continue to navigate the treacherous waters of this financial odyssey.
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Fed, Yellen, SVB 0:00
Money Miror Method 8:54
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