US Treasury General Account Monitoring
FRED:WDTGAL
Liabilities and Capital: Liabilities: Deposits with F.R. Banks, Other Than Reserve Balances: U.S. Treasury, General Account: Wednesday Level
The Treasury General Account (TGA) prior to the GFC of 2008 averaged between $4 and $5 billion.
When the debt ceiling people freaked when it hit $48 billion (9X more than the historic average.) LOL! Today it's $500 billion 100X more than the historic average on its way to $600!
Oddly enough to MMTers the TGA has never gone negative (As my friend
@HenricCont rightly points out) as #MMT claims that Gov't spends first taxes later. If TGA did go negative that would mean the Gov't spent more than tax revenues and borrowing. (Which is illegal in the US)
Q. Why doesn't the Federal Reserve just buy Treasury securities directly from the U.S. Treasury?
A. The short answer is that it supports the independence of the central bank in the conduct of monetary policy. The prices for new Treasury securities are set by private market demand and supply conditions through Treasury auctions.
Note This is not to be confused with QE (open market operations) the FED is allowed to buy in the open market and does. But that is not funding Gov't spending as such it is NOT increasing public debt. It is merely exchanging one asset dollars for the equivalent bond value (set by the free market.)
The $600 billion the US Gov't borrowed from the private sector (in less than 2 months which is equal to 2% of total US public debt) is now sitting in the TGA ready to be deployed in the next disaster that comes along. Once again proving #MMT WRONG! Gov't does not spend first and taxes later.
Once again to be very clear. The US Gov't must first tax and borrow from the private sector before spending. By LAW!
Why does all this matter? There are many reasons which I won't go into here. Just know that $600 billion of total deficits this year will simply sit in TGA unless some economic catastrophe comes along before Oct. (The end of the fiscal year for TGA)
When the debt ceiling people freaked when it hit $48 billion (9X more than the historic average.) LOL! Today it's $500 billion 100X more than the historic average on its way to $600!
Oddly enough to MMTers the TGA has never gone negative (As my friend
@HenricCont rightly points out) as #MMT claims that Gov't spends first taxes later. If TGA did go negative that would mean the Gov't spent more than tax revenues and borrowing. (Which is illegal in the US)
Q. Why doesn't the Federal Reserve just buy Treasury securities directly from the U.S. Treasury?
A. The short answer is that it supports the independence of the central bank in the conduct of monetary policy. The prices for new Treasury securities are set by private market demand and supply conditions through Treasury auctions.
Note This is not to be confused with QE (open market operations) the FED is allowed to buy in the open market and does. But that is not funding Gov't spending as such it is NOT increasing public debt. It is merely exchanging one asset dollars for the equivalent bond value (set by the free market.)
The $600 billion the US Gov't borrowed from the private sector (in less than 2 months which is equal to 2% of total US public debt) is now sitting in the TGA ready to be deployed in the next disaster that comes along. Once again proving #MMT WRONG! Gov't does not spend first and taxes later.
Once again to be very clear. The US Gov't must first tax and borrow from the private sector before spending. By LAW!
Why does all this matter? There are many reasons which I won't go into here. Just know that $600 billion of total deficits this year will simply sit in TGA unless some economic catastrophe comes along before Oct. (The end of the fiscal year for TGA)
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