On March 2023, after the #svbcollapse, the fed implemented the bank term funding program to support banks that were losing deposits in order to avoid a sistemic run and stabilize the system. The plan was supposed to last 12 months. After three months, one would think, or hope, the banking system would be stable. And yet, as the chart below shows, banks have been taking more and more money out of the program. Perhaps this is the reason why the fed paused interest hiking, to avert a more profound crisis. Despite J Powell efforts to convince the public the fed will continue the hawkish path, it is difficult to see that in practical terms, when he is tightening with his right hand, and printing money with the left one, and what would happen if the fed were to cancel the BTFP program to be coherent with its hawkish view.
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