Scarce Reserves

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Warsh's quest to shrink the Fed's balance sheet implies fundamental changes in the banking system, money markets, and Treasury issuance. He would be restarting QT even through the Fed just began expanding its balance sheet to address pressures in funding market. Treasury can lean on heavier bill issuance to moderate the market impact, but they will require the cooperation of private banks to ease the funding market impact. Banks would need to increase their own […] Click here to Subscribe! The post Scarce Reserves appeared first on Joseph Wang.