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Originally Posted by Muta
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First of all that $8 Trillion number is misleading.
Say I lent you a dollar and asked that you pay it back a day later. You follow through and pay me back a dollar the next day. Then say you come back a couple of days later and borrow another dollar and promptly pay it back the next day. The way that $8 Trillion is calculated it would imply I lent you two dollars, but in reality at no time did you owe me more than one dollar. Extrapolate my example to the largest banking institutions and the number of days in the time period measured and I can assure you that the amount of money owed to the Federal Reserve at any given time by these banks never appraoched $8 Trillion.
Second of all, by all means the Fed acted as lender of last resort when there was a liquidity crunch. This is actually what the Fed was created to do after the guilded age and the panics of 1907 and further reinforeced in the 1930s. Doing away with the Fed and it's job as lender of last resort is actually removing a safeguard on the financial system.
Third of all is that the reason for the secrecy of these transactions is that if the market knew on any given day how much a bank was tapping the Fed for or even that the bank needed to tap the fed there would be a run on said bank and it would likely go under right then and there defeating the purpose of being a lender of last resort.