Friday, October 28, 2016

Reserves and SOMA two year anniversary end of QE3

The Fed reduced reserves when they announced the rate hike in December 2015.  I think they did this so they could raise reserves in January after the hike to let everyone know how important they are.

Since the end of QE3, October 2014, reserves are down by $756 billion.

$319 billion from the US Treasury withdrawing some of its funds from commercial
          banks and depositing it to their own bank account at the Fed.  The Treasury
          General Account.

$181 billion from people with drawing currency from their bank accounts, no
          doubt to put under the mattress.

$164 billion from repos.  This is temporary.

$664 billion from the three above ways.

This is how the Fed has reduced reserves without reducing SOMA.

10/26/16   $4,200,534,019.5
10/29/14   $4,202,770,051.4  End of QE3

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