from King World News
They’re not telling you, but this is how bad the collapse is and what is being done to save the system.
June 16 (King World News) – Jeff Snider at Alhambra Partners: In its earliest years, the Discount Window wasn’t something to be avoided at all costs, it was nearly the whole point. In order to supply largely seasonal liquidity, the word “discount” meant banks could show up at one of the local 12 Fed branches and post collateral for an increase in their reserve balance. No one would be stuck holding illiquid even short-term paper.
Operating on a loose doctrine of “real bills”, there wasn’t even much management required. Most of the collateral being handed over was self-extinguishing, an exercised letter of credit or temporary funding note for some real economy purpose. Along with promoting the market for bankers acceptances, the Fed’s job was to ensure there wouldn’t be a cash crunch by “rediscounting” these financial instruments with almost no questions asked.