The Fed's Recent "Not QE" is "Not Working" And People Are Starting to Notice

The alarm bells are ringing all across the financial industry and finally, the mainstream media is starting to take notice of just how big of a mess the repo markets truly are.

The Federal Reserve, since riding in on their white horses in mid-September have been tossing money at the repo markets, hoping to stabilize and fix the problems that are ailing it, but unfortunately for them, things don't appear to be getting any better, but worse.

Just like after the 2008 crisis unfolded, banks are seemingly uncomfortable lending money to this space and the strain is starting to be felt as the Federal Reserve has been forced to balloon their balance sheet once again, throwing over $300 billion at the repo markets in just three short months.

(Source, federalreserve.gov)

I have been watching this train wreck unfold since it began, and have written a number of articles on how the Fed's statement that this is "not QE", is completely and utterly laughable, as the expansion of their balance sheet is happening at such a rapid velocity, that it is now occurring at a faster rate than the immediate months following the announcement of QE2 and QE3!

This is truly staggering and the fact that the mainstream media is just now taking notice is an indication of just how asleep at the wheel they have been for the past three months, blissfully content with the Fed printing copious amounts of money out of thin air, and dousing the raging flames that have seemingly engulfed the vital overnight repo markets, the markets that help keep the treasury markets and so many others operating smoothly on a daily basis.

However, they are asleep no longer and a quick google search of the amount of articles covering just how big of a mess the repo markets currently are will make your head spin.

Everyone and I mean everyone seems to of now caught on to what is unfolding and they are worried.

This is leading many to speculate that QE4 may soon be on the way, possibly as soon as before the year ends, that's just how dire things have become.

CNBC reports;

“If we’re right about funding stresses, the Fed will be doing ‘QE4’ by year-end,” Pozsar wrote. “Treasury yields can spike into year-end, and the Fed will have to shift from buying bills to buying what’s on sale – coupons.”

Forbes also seems to agree;

"Others see QE4 happening sooner rather than later. In a research report this week, Credit Suisse analyst Zoltan Pozasar told investors that, in order to calm short-term funding markets, the Fed will need to implement another round of quantitative easing “by year-end”—which is only three weeks away."

Other articles written by Barrons, The Washing Post and countless other sources also all seem to agree that whatever is currently unfolding in the repo markets is not good and a more serious approach is needed and needed soon.

Call it what they want, however, I believe history is going to show that QE4 is not going to begin at the end of 2019, nor the beginning of 2020, nor even later that year, but that it has already begun. 

QE4 began with the Federal Reserves massive injections into the repo markets in September 2019, despite the Fed's absurd claim that an accumulation of over $300 billion in debt, within three months, is "not QE".

The question is, how much more will they accumulate? How much more before they can put out this debt garbage fire and how many more digital, fiat dollars are going to be created out of thin air before the pain stops?

Who knows. But one thing that I do know is that this isn't over yet. Far from it.

Keep stacking.

- As first seen on the Sprott Money Blog