Money Market Crisis: Rolling TOMOs Are Really POMOs—Or QE In Drag

With the US Treasury set to crush the market with supply as far as the eye can see, if the Fed wants to even keep rates at current levels, it will need to fund these Treasury offerings. That means that it must do either outright QE, direct purchases of  Treasuries, or stealth QE in the form of these massive repo operations that will only grow over time. Instead of buying the paper outright, the Fed will just print the money out of thin air, and lend it to the Primary Dealers so that they can buy the paper.