The TGA and Reserves in the Treasury

Before 2008, the Fed controlled rates through what's called a scarce reserve system. After 2008, everyone was thinking that it's much better for the banks and the treasury to keep their cash on account at the Fed rather than with each other. The US treasury fell into that category as well; they also revised their operating procedures such that they wanted to keep a minimum of about $150 billion on deposit at the Fed. In 2021, we did kind of have a monster rally and there's a thinking that if this were to reverse, that would be risk negative.

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