It's repo week folks! The time of the year when potentially exciting things happen to repo & crazy theories abound. No worries, we're here to set the record straight in a special two-episode event. First, we look at this from the Fed's perspective:
mercatus.org/bridge/podcast… (1/4)
mercatus.org/bridge/podcast… (1/4)
We get help from @GeorgeSelgin who explains the struggle the Fed has had controlling certain liabilities on its balance sheet. Specifically, the TGA & Foreign Repo accounts combined have put Fed's balance sheet through roller coaster ride & drained as many reserves as QT. (2/4)
George also provides some practical suggestions for how the Fed can regain control of these accounts, including minor tweaks as well as major ones like expanding access of @dandolfa & Jane Ihrig's standing repo facility in crises to Treasury and foreign central banks. (3/4)
Lot's more on the show, so listen! Part two next week will have Josh Galper who is deep in the repo market and he will tell the story from perspective of the repo market. A must listen as you reflect on the excitement of repo week! (4/4)
P.S. Really fascinating to learn Treasury can do repos directly by law. Doesn't do it, but is legally able to do so.
P.P.S. From an earlier thread, this chart shows counterfactual where reserves would be if (1) no QT (black line and (2) no QT and TGA & Foreign Repo accounts had stayed at their pre-2008 levels (blue line). 
