by Wolf Richter
Wolf Street
A massive source of liquidity is approaching peter-out moment.
The excess balances in the federal government’s checking account – the “Treasury General Account” (TGA) at the Federal Reserve Bank of New York – that had ballooned to $1.8 trillion by July 2020 plunged to $674 billion as of Wednesday, according to the Fed’s balance sheet, released today, the lowest since April 2, 2020, having now unwound most of the monetized-but-unspent debt-binge spike from spring last year.
The Mnuchin Treasury started reducing the balance in the TGA in baby steps by borrowing less than they were spending. The Yellen Treasury announced in February that it would draw down the account to $500 billion by the end of June. $174 billion more to go: