To sum it up in very basic terms, USD liquidity increases and decreases under the following circumstances: This action removes liquidity from the market as buyers must pay for their bonds with dollars. The TGA also increases when the Treasury sells bonds. When it increases, it means the US Treasury is saving money and not stimulating economic activity. When it decreases, it means the US Treasury is injecting money into the economy directly and creating activity. This is the US Treasury’s checking account.
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