The Great Liquidity Debate | Michael Howell & Andy Constan
Forward Guidance
The Fed and the Treasury Getting Together to Flatline Liquidity
Michael Kofman: If QT is the goal here as people advertise, why is it that the Fed and the treasury kind of got together and seemingly have decided to try and flatline the level of liquidity? He says there's no negative impact on assets when you tap the RRP to fund the TGA. But a cynic would say that Janet Yellen is in a political office. And by using bills and tapping the RRP, she boosts liquidity. She doesn't- It's not a boost of liquidity. The taxpayers deserve to be financing longer term, instead of financing on bills. So we'll see if they keep trying to fund with bills instead of bonds.
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