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Daniela Gabor questions the recent increase in the U.S. Treasury General Account (TGA) target above the $500 billion to $600 billion range set during the Biden administration.
She argues that this move removes over $300 billion in Federal Reserve reserves and liquidity from the financial system at a time when high financing demand for artificial intelligence is constraining both sovereign and private sector borrowers.
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Gabor previously noted that the Federal Reserve has been buying $40 billion in U.S. Treasuries monthly since December, a move that attracted limited attention compared to recent interventions (source). She has also observed Andy Haldane’s shift in fiscal policy thinking to include productivity trends since his 2017 speech (source). These earlier analyses provide context for Gabor’s latest concerns about system liquidity.