Treasury General Account: Difference between revisions

The problem from this scenario is that the FED has adopted an ample reserves framework <ref>https://www.newyorkfed.org/newsevents/speeches/2022/zob220908#:~:text=In%20this%20system%2C%20an%20ample,over%20short%2Dterm%20interest%20rates.&text=The%20Federal%20Reserve%20had%20been,during%20the%20Global%20Financial%20Crisis.</ref>, and has estimated that the level of reserves needed in an ample reserves regime is equivalent to the average level of reserves in December 2019 as a share of nominal GDP (NGDP), or 8 percent, about $2 trillion. <ref>https://www.newyorkfed.org/medialibrary/media/markets/omo/omo2021-pdf.pdf</ref> This means that debt issuance coming from reserves, will likely drain all remaining excess reserves available, leaving the finantial system constrain and fragile, a significant headwind for risk assest, credit and the economy.  

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