New York Fed Again Upsizes Liquidity Plans for Turn of the Year

They're considered one of, if not the, premier newspaper in the US, but have been falling down a lot lately.

"One one side, we have geophysicist Dr. Alicia Gomez to talk about the history of learning about the shape of the earth and its place in the cosmos. On the other side, we have Bob from the internet, who claims it's flat".

Edit BTW, good follow if you're interested in this sort of asymmetry and how it's playing out in many ways: https://twitter.com/jayrosen_nyu

If I lend my friend $10 every day for lunch and he pays me back the next day and this happens 5 days in a row in what context would it make sense to say I have lent him $50 dollars? The linked discussion about cumulative liquidity seems completely full of FUD and designed to obfuscate rather than illuminate its readers. Less of this and more links to Matt Levine please.

I'm a foreigner so maybe someone can answer me; is this money earmarked? Will it be traced? Are the books open and available to everyone?

In short; can we see exactly what this money is used for?

Otherwise it's just a big robbery.

> is this money earmarked? Will it be traced? Are the books open and available to everyone?

Yes, it's earmarked. Yes, it's traced.

No, the Fed's books are not "open to everybody". They are, however, open on a delay to a ridiculous level as you can find from their website. (As in, if you want to know how much each institution has borrowed on what terms, you can do that.)

Here is my admittedly ignorant question about this: is it possible that the institutions borrowing these funds are actually using those funds not for relatively low-risk purposes (e.g., paying taxes), but instead to trade "overnight"? Similar to how a high-net-worth individual can borrow against their assets for a very low rate and then turn around and invest those cheap-interest-rate funds into higher-return (i.e., riskier) investments?

This is wholly unsubstantiated, but a link someone posted on this issue in a previous submission on HN (I can't find it) suggested that hedge funds in particular are the main institutions causing this, that the too-big-to-fail banks (JP, BofA, etc.) are unwilling to lend to them in the repo market because the hedge funds are taking too much risk with those funds, and the hedge funds are in turn forcing the fed's hand by telling them that they either step in with funds or they'll either be forced to sell assets en masse or, worse, fail. I'm probably using the wrong language to describe the mechanics of how this would actually take place (e.g., I'm not suggesting a hedge fund actually calls up and forces the fed's hand).

I have seen multiple people assert there's a reasonable explanation for this and others suggest this is just more QE and that the market, after years of QE, can't function properly without it, and so I'm floating what is likely a conspiracy theory as an attempt at getting an explanation from someone informed. Nearly impossible to believe this is a benign event. The parties (the fed, the big banks, hedge funds) haven't earned that trust so if it is benign then maybe there's a first time for everything.