SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
To donate by check, phone, or other method, see our More Ways to Give page.
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
Is the Fed reacting to market volatility or preparing for recession? (Public domain)
A number of financial experts and investors are sounding the alarm over the Federal Reserve's recent infusion of cash into the market and warning that the actions by the central bank could be the precursor to economic crisis.
On October 22, the Fed pumped $99.9 billion in temporary liquidity into the market to ease stresses brought on by a tightening credit market. Two days later, on October 24, the bank upped that to $134 billion.
"What is the Fed not telling us?" wondered Northman Trader's Sven Heinreich.
The Wall Street Journal explained the Fed's actions:
Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by dealer-owned bonds. The Fed's interventions are aimed at ensuring the financial system has enough liquidity and short-term borrowing rates remain well behaved. Permanent buying expands Fed holdings and further reduces the risk of money-market volatility.
Heinreich expanded on his concerns over the intervention in an opinion piece for MarketWatch on Saturday.
"These actions are surprising," wrote Heinreich. "What stable financial system requires over $100 billion in overnight liquidity injections? The Fed did not see the need for these actions coming. It is reacting to a market that suddenly requires it."
For markets expert Guy Adami, the Fed's expansion of liquidity through the interventions is worrying.
"Fed's 'temporary' overnight repo operation is going from an insane $75B to $125B," tweeted Adami. "I'm sure it's nothing."
Financial observer Gregory Mannarino echoed those concerns on Twitter.
"The system is running out of liquidity," said Mannarino. "They are desperate to prevent a credit freeze/complete lock up of the financial system.. complete meltdown."
Â
The amount of capital in play, said Twitter user @HongPong, could be used for more progressive purposes and shows how much money there is to play with.
"This totally mysterious spike in money printing is 2/3rds of the size estimated required to delay climate change by 20 years," he said.
As Heinreich put it on Twitter, the constant injections of cash indicate a deeper issue with the stability of the system.
"I'll go out on a limb here," said Heinreich, "but a financial system that requires over $100B of liquidity injections every day, temporary, permanent or otherwise, has major issues."
Donald Trump’s attacks on democracy, justice, and a free press are escalating — putting everything we stand for at risk. We believe a better world is possible, but we can’t get there without your support. Common Dreams stands apart. We answer only to you — our readers, activists, and changemakers — not to billionaires or corporations. Our independence allows us to cover the vital stories that others won’t, spotlighting movements for peace, equality, and human rights. Right now, our work faces unprecedented challenges. Misinformation is spreading, journalists are under attack, and financial pressures are mounting. As a reader-supported, nonprofit newsroom, your support is crucial to keep this journalism alive. Whatever you can give — $10, $25, or $100 — helps us stay strong and responsive when the world needs us most. Together, we’ll continue to build the independent, courageous journalism our movement relies on. Thank you for being part of this community. |
A number of financial experts and investors are sounding the alarm over the Federal Reserve's recent infusion of cash into the market and warning that the actions by the central bank could be the precursor to economic crisis.
On October 22, the Fed pumped $99.9 billion in temporary liquidity into the market to ease stresses brought on by a tightening credit market. Two days later, on October 24, the bank upped that to $134 billion.
"What is the Fed not telling us?" wondered Northman Trader's Sven Heinreich.
The Wall Street Journal explained the Fed's actions:
Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by dealer-owned bonds. The Fed's interventions are aimed at ensuring the financial system has enough liquidity and short-term borrowing rates remain well behaved. Permanent buying expands Fed holdings and further reduces the risk of money-market volatility.
Heinreich expanded on his concerns over the intervention in an opinion piece for MarketWatch on Saturday.
"These actions are surprising," wrote Heinreich. "What stable financial system requires over $100 billion in overnight liquidity injections? The Fed did not see the need for these actions coming. It is reacting to a market that suddenly requires it."
For markets expert Guy Adami, the Fed's expansion of liquidity through the interventions is worrying.
"Fed's 'temporary' overnight repo operation is going from an insane $75B to $125B," tweeted Adami. "I'm sure it's nothing."
Financial observer Gregory Mannarino echoed those concerns on Twitter.
"The system is running out of liquidity," said Mannarino. "They are desperate to prevent a credit freeze/complete lock up of the financial system.. complete meltdown."
Â
The amount of capital in play, said Twitter user @HongPong, could be used for more progressive purposes and shows how much money there is to play with.
"This totally mysterious spike in money printing is 2/3rds of the size estimated required to delay climate change by 20 years," he said.
As Heinreich put it on Twitter, the constant injections of cash indicate a deeper issue with the stability of the system.
"I'll go out on a limb here," said Heinreich, "but a financial system that requires over $100B of liquidity injections every day, temporary, permanent or otherwise, has major issues."
A number of financial experts and investors are sounding the alarm over the Federal Reserve's recent infusion of cash into the market and warning that the actions by the central bank could be the precursor to economic crisis.
On October 22, the Fed pumped $99.9 billion in temporary liquidity into the market to ease stresses brought on by a tightening credit market. Two days later, on October 24, the bank upped that to $134 billion.
"What is the Fed not telling us?" wondered Northman Trader's Sven Heinreich.
The Wall Street Journal explained the Fed's actions:
Fed repo interventions take in Treasury and mortgage securities from eligible banks in what is effectively a short-term loan of central-bank cash, collateralized by dealer-owned bonds. The Fed's interventions are aimed at ensuring the financial system has enough liquidity and short-term borrowing rates remain well behaved. Permanent buying expands Fed holdings and further reduces the risk of money-market volatility.
Heinreich expanded on his concerns over the intervention in an opinion piece for MarketWatch on Saturday.
"These actions are surprising," wrote Heinreich. "What stable financial system requires over $100 billion in overnight liquidity injections? The Fed did not see the need for these actions coming. It is reacting to a market that suddenly requires it."
For markets expert Guy Adami, the Fed's expansion of liquidity through the interventions is worrying.
"Fed's 'temporary' overnight repo operation is going from an insane $75B to $125B," tweeted Adami. "I'm sure it's nothing."
Financial observer Gregory Mannarino echoed those concerns on Twitter.
"The system is running out of liquidity," said Mannarino. "They are desperate to prevent a credit freeze/complete lock up of the financial system.. complete meltdown."
Â
The amount of capital in play, said Twitter user @HongPong, could be used for more progressive purposes and shows how much money there is to play with.
"This totally mysterious spike in money printing is 2/3rds of the size estimated required to delay climate change by 20 years," he said.
As Heinreich put it on Twitter, the constant injections of cash indicate a deeper issue with the stability of the system.
"I'll go out on a limb here," said Heinreich, "but a financial system that requires over $100B of liquidity injections every day, temporary, permanent or otherwise, has major issues."