On Thursday, the U.S. Federal Reserve pumped $75 billion into the financial system through overnight repurchase, or "repo" agreements, marking the third time it intervened in U.S. money markets in as many days. The last time the Federal Reserve flushed the banking sector with this much cash was the financial crisis of 2008.

The Fed stepping into the market to give more cash, unannounced, three days in a row, screams something is very wrong. There is a massive lack of cash at hand. We're also already in a very loose and cheap money environment with really super low interest rates and trillions in cash that has just been printed and injected in the market by the way of quantitative easing. The fact that the banks need $75 billion of extra cash every day, day after day, is a sign that something is dramatically wrong. The last time the banks were doing this to shore up their balance on the sheets was in 2008.

Usually, the repo process is nearly seamless. Most of the previous day’s trades just get rolled over into the next day’s repos, with a slight tinkering of the rates and slight shifts in the collateral. But this week has been unusual.

At the start of the week, the repo rate unexpectedly jumped higher, indicating that there was a shortage of dollars compared with demand. On Tuesday, the Fed stepped into the market by supplying $53 billion of cash in exchange for securities. On Wednesday, the Fed supplied $75 billion of cash–and said it had bids for an additional $5 billion of repos.

On Wednesday afternoon, the New York Fed announced that it would once again supply cash to the repo market on Thursday morning.

It’s not clear what has caused the cash crunch. On Monday, several investors pointed to developments in Saudi Arabia and the due date for corporate tax payments causing an unusual surge in demand for cash. But the stress has continued even as those events have receded.

Fed chair Jerome Powell was asked about the crunch at his press conference Wednesday but offered little by way of explanation. So the mystery continues alongside the New York Fed’s emergency funding.

https://www.theblaze.com/glenn-radio/federal-reserve-repo-market