The Repo-Crisis of September 2019
On Tuesday, September 17th. the Repo Market in the US deteriorated in a dramatic surge of
demand for liquidity in the night from the 16th to the 17th to 10% far above the target rate
of the Fed.1 It needed massive intervention of the Fed to counter a lasting major increase in
the short-term interest rates afterwards. The Fed’s had to supply a $53.2 billion liquidity
injection on Tuesday. The Federal Reserve had again immediately to inject an additional $75
billion on Wednesday the 18th September into U.S. money markets. This brought the repo
rate for general collateral repurchase agreements down to 2.175%, down about where it
was last week from Tuesday’s record high of 10%. However, the New York Fed said on
Wednesday that the effective fed funds rate busted through policy makers’ 2.25% cap the
day before, coming in at 2.30%. That’s bad because it shows the Fed was losing its grip on
short-term interest rates, undermining its ability to guide the financial system.2
Adjusting something called the interest rate on excess reserves, or IOER, was one likely
short-term remedy (see figure 1). Longer-term solutions include expanding the Fed’s balance
sheet to replenish reserves in the banking system. The Fed would have therefore to buy
assets submitted as collateral in the repo market on a longer term as only overnight. In the
end the Fed has to return to something like an emergency quantitative easing (QE).
Figure 1 - Various short-term interest rates (effective and target Federal Funds Rate, IOER
and repo rate) in 2019.
Source: Federal Reserve.
1 Jeanna Smialek, Matt Phillips (2019), Fed Jumps Into Market to Push Down Rates, a First Since the Financial
Crisis, in: The New York Times, September 17, 2019. Tyler Durden (2019), Repo Market Guru -"What Ever
Changed Last Week Is Still A Problem", in: Zerohedge.com, September 26, 2019.
2 Liz McCormick, Alex Harris (2019),Fed Injects Liquidity Into Markets as Key Rate Busts Through Cap, in:
Bloomberg, September 19, 2019:
Initially observers though it would be only a miscalculation of liquidity of some money
market dealers due to tax payments due at the end of the month. However, after the
massive intervention of the Fed the liquidity demand did not came down rapidly something
else must have been a cause than just some short-term liquidity problems.
Simply, everybody began asking themselves what the hell was going on?
Before addressing this issue let us explain some basic facts about the repo market.
At first let us answer the question, what is the global repo market?
"The repo market is pivotal to other financial markets, particularly those in bonds and derivatives, as
it is the main source of financing for dealers. Repo, being a collateralized loan provides a secure
means of lending and, for borrowers, an economic means of leverage."
Therefore they offer easy access to liquidity for commercial dealers in particular in need to short-
term liquidity when they transformed too much of their liquidity to other financial investments.
Against a fee, the repo-interest rate - i.e. the repo rate -, they are able to cover their actual payment
obligations in time. Therefore a mismatch between the assets bearing e.g. high interest rates and the
short-term payment obligations can be closed at the micro level by borrowing such liquidity on the
"Fed interventions in the repo market, like the one deployed Tuesday and planned for Wednesday,
were commonplace for decades before the crisis. Then they stopped when the central bank changed
how it enacted policy by expanding its balance sheet and using a target rate band.
The tumult seen Monday and Tuesday doesn’t mean another global funding crisis, even though
trouble getting funds through repo a decade ago doomed Lehman Brothers and almost snuffed out
the global financial system."3
QE of the Fed became a substitute for short-term interventions in the money market by the central
banks instead of acting in time of stress in the money market as lender of last resort. Additionally the
Fed and other central banks like e.g. the ECB introduced a policy of forward guidance to give financial
markets an orientation to avoid miscalculations.
However there is currently a liquidity squeeze in other parts of the world as well. One huge problem
to the global financial system relates to so called phantom investments.
"In our latest issue of F&D, we shine a spotlight on the hidden corners of the global economy. And to
that end, one of the articles features new IMF research indicating that in one of those dark corners
sits an astonishing $15 trillion in worldwide FDI -- phantom investments that pass through empty
corporate shells that have no real business activities -- equivalent to the combined annual GDP of
economic powerhouses China and Germany."4
3 Liz McCormick (2019), Fed Preps Second $75 Billion Blast With Repo Market Still on Edge, in: Bloomberg,
September 19, 2019.
4 Jannick Damgaard, Thomas Elkjaer, Niels Johannesen (2019), The rise of phantom investments - Finance &
Development (F&D), International Monetary Fund, Washington D.C., September 19, 2019.
"Interestingly, a few well-known tax havens host the vast majority of the world’s phantom FDI.
Luxembourg and the Netherlands host nearly half. And when you add Hong Kong SAR, the British
Virgin Islands, Bermuda, Singapore, the Cayman Islands, Switzerland, Ireland, and Mauritius to the
list, these 10 economies host more than 85 percent of all phantom investments," said researchers
Jannick Damgaard, Thomas Elkjaer, and Niels Johannesen." ibid.
What kind of collateral is accepted in the repo market?
"Beyond providing a means for secured short-term borrowing and lending, repo markets are
essential for funding the market-making books of broker-dealers for both sovereign and
corporate debt, and so play a key role in underpinning secondary market liquidity for global
cash bond markets. Similarly, repo markets are the glue that binds many derivatives with
underlying cash securities, in particular exchange-traded bond futures and options."5
As collateral all different kinds of money markets assets including complex derivatives are
trade with different time frames of up to two years. The nominal value of the asset can be
offered as collateral with a haircut, i.e. a reduced value by x% to avoid losses for the repo
buyer in case the contract fails due to the counter party to fulfill its promises to take back
the asset as according to the repo agreement (see figure 2).
Figure 2 - Development of Haircuts of Collateral in the US Repo Market, 2010 - 2019.
5 ICMA-ERCC (2019), ICMA European Repo and Collateral Council, June 2019.
In the US repo market there are two types of repo markets, the tri-partite repo market6 and
GCF repo market.7
If securitized e.g. MBS are accepted as collateral this could become a problem, if the
valuation of such complex assets fails due to uncertainty about the risk assumed by some
rating agency This made these assets in the financial crisis immediately illiquid because
nobody knew under such circumstances a method for a valuation accepted on the buyers
side. This led to a rapid collapse of the money market and liquidity dried up. It was
something like a heart attack of the financial system. Without the central bank supplying the
necessary liquidity as lender of last resort the whole financial system was put at risk.
"The GCF (General Collateral Finance) repo market is a blind brokered interdealer market,
meaning that dealers involved in the transactions do not know each other’s identity (i.e.
something like a dark pool, GE), are arranged by interdealer brokers that preserve the
participant’s anonymity. Only securities that settle on the Fedwire Securities Service can
serve as collateral for a GCF repro transaction. GCF repo trades are settled on the books of
the clearing bank using the tri-party repo infrastructure and thus are an integral part of tri-
party repo settlement." ibid.
"During the financial crisis of 2007-09, particularly around the time of the Bear Stearns and
Lehman Brothers failures, it became apparent that weaknesses existed in the design of the
U.S. tri-party repo market, used by major broker-dealers to finance their inventories of
6 For further details see Adam Copeland, Darrell D, Antoine Martin, Susan McLaughlin (2012), Key
Mechanics of The U.S. Tri-Party Repo Market, in: FRBNY Economic Policy Review, Federal Reserve
Bank of New York, November 2012, 17-28.." Tri-Partite refers to the fact that a clearinghouse has
been established These clearing banks settle repo transactions on their own balance refers.
Maintaining cash and securities accounts for dealers and cash providers, the clearing banks settle
the opening leg of a tri-party repo by transferring securities from the dealer’s securities. The Bank of
New York Mellon (BNYM) and JP Morgan Chase (JPMC).are such clearing banks. Cash providers in this
segment of the market are primarily MMFs, securities lenders, and other institutional cash providers,
such as mutual funds, corporate treasurers, and state and local government treasurers. These
investors seek interest income at short maturities. For some investors, overnight repos serve as a
secured alternative to bank deposits. Together, MMFs and securities lenders account for over half of
tri-party repo lending. Dealers use the tri-party repo market mainly to obtain large scale, short-term
financing for their securities inventories at a low cost. They typically use only one of the two clearing
banks to settle their tri-party repos. Large cash providers maintain accounts at both clearing banks in
order to transact with dealers at each of them. U.S. Treasury securities and various U.S. government
agency obligations (mortgage-backed securities [MBS], debentures, and collateralized mortgage
obligations) accounted for approximately 85 percent of U.S. tri-party repo collateral in June 2012.
Interestingly JP Morgan Chase stopped to supply sufficient liquidity to the repo market. David Henry
(2019), Too big to lend? JPMorgan's cash tweaks take toll on U.S. repo, in: Reuters News, October 1, 2019.
7 Michael J. Fleming, Kenneth D. Garbade (2003), The Repurchase Agreement Refined: GCF Repo, in: Current
Issues in Economics and Finance, Federal Reserve Bank of New York, Vol. 9,(6), June 2003.
securities. These design weaknesses had the potential to rapidly elevate and propagate
Following the crisis, an industry-led effort sponsored by the Federal Reserve Bank of New
York was undertaken to improve the tri-party repo market’s infrastructure, with the main
goal of lowering systemic risk. This article describes some key mechanics of the market—in
particular, the collateral allocation process and the 'unwind' process—that have contributed
to the market’s fragility and delayed the reforms." Copeland, Darrell, Martin, McLaughlin
"The GFC repo market is not included in the overall statistics of the repo market because the
market does not provide net financing to the dealer community in the aggregate. Instead,
the market allows dealers to redistribute cash among themselves."ibid.
The current ongoing repo market crisis is an indicator that these reforms have not been
successful in the end.
The key problem is the unwinding of the Feds balance sheet which have been oversized
through the diverse Feds QEs of the past. It is exactly this attempt of the unwinding which
led to the new outbreak of chaos at the repo market (see Figure 2).
The only remedy of the recent liquidity crunch the Fed knew was to return to an emergency
QE again. Now, however, it is not tooted as something extraordinary to save the global
economy - like Ben Bernanke did -but the submission of the Fed to market forces which give
it no other chance to stabilize the market by doing QE again. In principle the Fed is riding a
tiger not knowing where he will take it in the end.
Another key problem is that the Fed is not only the lender of last resort to the US but with
the US Dollar as the key reserve currency in the world, it has to take this into account, i.e. as
lender of last resort for the global financial system as well. However, this poses the problem
of Triffin's dilemma for its monetary policy. The needs of the domestic financial markets
must not be consistent with the needs of the global financial markets of the rest of the
Figure 3 - Federal Reserve balance sheet and bank reserves of the Fed since 2008 in bill. US-
Source: Federal Reserve & Reuters, 2019.
Unwinding the Federal reserve balance sheet is therefore a lot of guesswork how much and
how fast the central bank could remove its excess liquidity so that it does not create a
liquidity shortage in the money markets. On the other hand excess liquidity could lead to
excessive risk taking of market participants since the cost of borrowing are too low. The Fed
therefore is walking on a tight rope of losing contact with the situation prevailing at the
actual money markets for liquidity.
How large is the global repo markets?
"There are large repo markets in the US and Europe (including the Eurozone, UK, Denmark
and Poland). There is also a large repo market in Japan, although the form it has traditionally
taken (gentan) is strictly-speaking a type of securities lending transaction. The top 20
markets include Argentina, Australia, Canada, India, Mexico, New Zealand, Russia,
Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand and Turkey.
The remainder of the world’s repo markets are in perhaps another 30-40 countries with
reasonably active markets (excluding central bank repo). There are also markets in what are
incorrectly called repo, notably in China. These actually trade secured loans rather than true
(title transfer) repos."8
8 see ICMA https://www.icmagroup.org/Regulatory-Policy-and-Market-Practice/repo-and-collateral-
Therefore there are numerous repo markets around the globe, but the one in the US and
Europe are the most important ones. In principle they offer short-term liquidity to
commercial banks which have miscalculated their cash-flow.
There is little overall comprehensible information about the overall global size. After all
there are estimates available from the International Capital Market Association (ICMA).
"The ICMA’s semi-annual survey of the European repo market in June 2018 produced a figure of
about EUR 7 trillion in terms of outstanding repo contracts for the survey sample (which includes the
most active participants in the European repo market but is not comprehensive). At about the same
time as the ICMA survey, the Federal Reserve Bank of New York reported that the outstanding repo
business of its primary dealers (who may account for as much as 80-90% of the US market) as almost
USD 4 trillion. The global market, although it has contracted since 2007, may be over EUR 15 trillion in
outstanding size and turnover about EUR 3 trillion per day." ibid.
What information is available in real-time?
It is just the ex post previous and actual market outcomes as they happened in ongoing trading
activities plus some outdated macro information.
Figure 4 Primary Dealers Holdings of Treasuries since 1997 until 2019 in bill. US.-Dollar.
Regular bi-annual repo market surveys are made only in Europe by the ICMA European Repo and
Collateral Council (ICMA-ERCC) and the US. In a high-frequency market this means that there is little
knowledge about the actual factors moving the repo market. All market participants including the
central bankers are groping more or less in the dark. The GFC dark pool makes it even more difficult
to identify the single agents in the market.
One possible source of the liquidity shortage in September could be related to the huge
federal deficit due to the tax reform of the beginning in 2016 by the Trump administration.
The US federal government has steadily sell more government bonds to cover a deficit which
already exceeds more than a trillion US-Dollars. That needs a respective numbers of buyers
in the secondary market. Primary market bond dealers just take those government bonds
and trying to sell it to buyers in the secondary market, i.e. pension funds or insurance
companies etc. But there is no guarantee that this works out smoothly. If they cannot sell
these bonds in due time they face a liquidity shortage (see figure 3) and can try to obtain
liquidity instead via the repo market.
In principle there is a conflict between the expansionary fiscal policy stance of the Trump
administration on the one hand and the monetary policy stance of the Fed who is trying to
reduce the excess liquidity created over the last ten years on the other. It is no surprise that
Donald Trump persistently attacks the Fed for not lowering the Fed Funds Rate as rapidly to
keep the economy on an expansionary growth path. While Trump is worried that this
monetary policy could trigger a recession and diminish his chances for reelection next year,
the Fed still claims that the risk of a recession is not present at the moment and lowered the
interest rate only quite slowly by one quarter point after one quarter point at a time (see
figure 1). The Fed does want to avoid that financial markets could otherwise become over
optimistic and create a financial market bubble which later on will burst as last time in 2008.
Why is the exploding US federal deficit a possible major source of the repo market crisis?
The most recent projections of the Congressional Budget Office (CBO) predicts that the
federal deficit in 2019 will lead to a 2019 deficit of $960 billion, or 4.5 percent of gross
domestic product (GDP). The projected shortfall (adjusted to exclude the effects of shifts in
the timing of certain payments) rises to 4.8 percent of GDP in 2029 (see figure 4).9
The tax reform10 enacted at the beginning of 2018 was pushed through congress with the
Republican majority ignoring a financing originally planned by cut spending on health
insurance scheme introduced by the Obama administration through the Patient Protection
and Affordable Care Act (PPACA) in 2010. The stiff resistance across the US population
including Republican constituencies let this original strategy of the Trump administration fail
in the end. So federal spending on healthcare increased significantly at the same time when
the tax revenues declined. This leads to a persistent uncovered federal deficit for the future.
Up to now it is unclear how this financing gap could be closed at some time in the future.
US Congress has repeatedly raise the debt ceiling this year because otherwise the US
government and public administration would have to close down.
9 CBO (2019), A Visual Summary of an Update to the Budget and Economic Outlook: 2019 to 2029,
Congressional Budget Office, Washington D. C., August 2019.
10 Tax Cuts and Jobs Act of 2017 (TCJA)
Figure 5 - CBO projections of the US federal deficit for the year 2020 until 2029.
Figure 6 - Total debt in trillion IUS-Dollar and share of GDP in percent held by the public, 1940 -2024.
Source. Congressional Budgetary Office.
Since the deficit has to be financed by issuing government bonds this put a steady pressure
on the money market for the foreseeable future.
Figure 7 - Trading volume in the US tri-partite repo market in bill. US-Dollar, 2010 until
Source: Federal Reserve Bank of New York (FRBNY).
A look at the development of the trading volume on the tri-partite repo market reveals that
in particular previous to the September crisis there is a rapid increase emerging since spring
2018 of US treasuries excluding strips while components show now significant change over
time. The is an indicator that the volume of such assets traded on the repo market have
steadily risen since then.
At the same time due to the trade conflict China has began to reduce its US government
bond holdings putting additional pressure on the US money and capital markets.12 If this
11 The data published by the Fed until now do not include the September 2019.
assessment is correct there is no foreseeable changes in the near future in the US repo
market. It is not a short-term mismatch, but signals instead a persistent crowding-out
effect13 of the US money markets due to the dramatically increasing deficits. It si therefore
no surprise that many US economist and politicians become addicted to a new approach of
modern monetary theory (MMT).
Modern Money Theory (MMT) is a heterodox macroeconomic theory that describes
currency as a public monopoly for the government and unemployment as evidence that a
currency monopolist is overly restricting the supply of the financial assets needed to pay
taxes and satisfy savings desires. MMT is an evolution of chartalism and is sometimes
referred to as neo-chartalism. Its macroeconomic policy prescriptions have been described
as being a version of Abba Lerner's theory of functional finance.14
The currently popularity rests on the fact that the general inflation rate, e.g. HICP, has not
increased after the major central banks have expanded their balance sheets dramatically via
QE after the Great Recession. The excess liquidity was absorbed by capital markets in
particular in real estate and equities. This wealth effect did however lead to a major increase
in the effective demand of consumer goods. One explanation for this is that the wealth
increases were primarily benefitting the happy few at the top 1% of the wealth distribution.
They cannot spend enough to have a significant impact on consumer prices.
This however raises the before mentioned problem of phantom investments which worry
the IMF now. It is an effect of money illusion as long as not a large number of wealth owners
begin to spend this virtual money wealth for real consumer goods and services. On the other
hand the increase in real estate prices leads to impoverishment of an increasing number at
the bottom of the income and wealth distribution reaching far out into the middle class.
They cannot afford housing and rents as before and have to reduce their demand. The tiny
house movement is a symptom of this distortions created by the monetary policy of creating
Furthermore the indebtedness of private households leads to a fragility of the financial
system which cannot cope with major future economic downturn. It would under such
circumstances make the past Great Recession of 2008 look tiny.
It is these subconscious worries about the uncertain future which significantly contribute to
the fragility of the global financial system. There is an understanding that the current debt
driven growth trajectory is unsustainable in the end. However, people are looking for safe
havens in case the mega-financial bubble would go bust at some time in the future.
12 Jeff Cox (2019), China has cut its holdings of US debt to the lowest level in two years amid trade tensions, in::
CNBC , May 16, 2019.
13 Willem Buiter (1977), ‘Crowding out’ and the effectiveness of fiscal policy, in: Journal of Public Economics,
Vol. 7(3), June 1977, 309-328.
14 Warren Mosler (1997), Full Employment and Price Stability, in: Journal of Post Keynesian Economics, Vol.
20(2), inter 1997–98.
What was going on in the US yield curve?
The yield curve is a construct which shows the relation of average interest rates and the
different time structures. Since this relation changes over time one calculate the evolution
yield curve on a day by day basis, i.e. a dynamic yields curve.
Normally the yield curve shows a steady increase over the time structure, i.e. the longer the
time for a bond the higher the interest rate. To commit to a fixed interest rate for e.g. for
two years is considered as less risky than to ten years or twenty years.
However this steadily increasing of the interest rates over the yield curve change under
financial stress of the financial markets. If there is a liquidity shortage or the central bank
raises the federal funds rate because the economy is overheating and the general inflation
rate exceeds the target rate significantly it can raise the federal funds rate to dry up
excessive liquidity. Under such circumstances the short-term interest rates are getting higher
than the long-term interest rates. This inverse yield curve is considered as an early warning
indicator for a future recession.
Figure 8 - US yield curve on 5th of May and 27th of September 2019.
What is obvious is that the US yield curve inverted already before September 2019. This was
due to the fact that the Fed was trying to unwind is balance sheet and has raised the federal
fund interest rate (see figure 1) since March 2018 step by step usually by a quarter
At the same time bonds were floating into the US bond market in particular in the range of
two to ten years. With sky high equity prices and turmoil in global markets due to the
escalating trade war between the US and China, the possibility of a No-Deal-Brexit and rising
tensions with Iran investors were seeking a safe haven in US bonds in particular US federal
government bonds. With an excess demand of bonds in particular of US government bonds
This drove down interest rates in the range of two to ten years.
In the end there were two adverse movements were happening. The Fed wanted to raise its
federal fund rate even further but at the same time interest rates for bonds were falling
leading to an inverse yield curve in the range from two to ten years. Donald Trump attacked
the Fed for this inconsistency in the monetary policy design. He was demanding a rapid
decrease of the federal fund rate by a whole one percentage point.15 This created
speculation in the financial markets that the Fed might reduce the federal funds rate much
more on the next day than it did in the end.16
It made sense under such circumstances to buy large amounts of government bonds before
and finance this by repos in the repo market. The interest rate differential between the
government bonds and the federal funds rate before and after the adjustment offered a nice
opportunity for interest rate arbitrage. This speculation failed however when the Fed
reduced the federal interest rate only by a quarter percent instead more, i.e. half or even
one percent as Trump was demanding. Speculator made because of this a loss instead of a
profit. Since they had bought the bonds on credit via repos they had to needed liquidity to
fulfill their repo obligations in the following days. Overnight the repo interest rate due to a
huge excess demand for liquidity jumped to about 10% and would have led to chaotic
conditions in the repo market on September 18.. The Fed had to step in as lender of last
resort and supply significant amounts of liquidity to avoid defaults of a couple of primary
dealers. In principle it was bailing out those dealers to stabilize the overall repo market. To
make sure that no panic could emerged during the following days the Fed extended this
emergency lending until the end of the month September.
Finally this intervention of the Fed helped to stabilize the US repo market.17 In the end it cost
the Fed 400 bill. US Dollars to bailout the repo market.
Is this the end of the story? Not really. The problem of the inverse yield curve has not been
solved. This would need a more drastic reduction of the federal funds rate to reduce the risk
of financial market turbulences in the coming months.
The Wall Street bankers are demanding for a relaunch of QE and a further rapid reduction of
the federal funds rate to stabilize the financial markets by ending the inverse yield curve..
The board members of the Fed however are worried that they would lose room to maneuver
15 Jeanna Smialek (2019), Trump Urges ‘Big’ Rate Cut as Fed Faces Challenges, in: The New York Times,
September 16, 2019.
16 Jeanna Smialek (2019), Fed Cuts Interest Rates by Another Quarter Point, in: The New York Times , September
17 Alexander Saeedy (2019),Why the Repo Market Is Such a Big Deal—and Why Its $400 Billion Bailout Is So
Unnerving, in: Fortune Magazin, September 23, 2019.
if the US economic conditions would deteriorate further. Than the bank would have no
chance avoiding negative interest rates already necessary in other countries like Denmark, or
Switzerland for example. They still prefer a slower gradual approach of a step-by-step
Struggle about the monetary policy of the Fed is therefore destined to go on.
The repo market crisis also laid bare a problem in the institutional design of the repo market.
The tri-partite repo market is not functioning under financial market stress.19 JP Morgan
stopped to offer liquidity at a time when it was needed most. Instead is kept it inside the
bank to stabilize its own balance sheet. The fed had to step in as lender of last resort.
This reminds to the situation of AIG during the Great financial and economic crisis. AIG was
unable fulfill its obligations as reinsurance for securitized assets at the time of a systemic
crisis. Without the Fed to step in with 400 bill. US-Dollar the repo crisis would have caused
significant more damage. So under normal conditions the two commercial banks earn nice
profits but cannot offer excess liquidity in a time of crisis. Why then cling to the tri-partite
The core problem however is the excessive public deficits of the US federal government
originating from the tax reform in 2017. In the end we have a situation well known from the
idea of the fiscal policy of the price level.20 The expansionary fiscal policy leads to a loss of
control of the central bank to determine the price level by monetary policy instruments.
The next test will be the development of the general inflations rate in the future. Will it rise
or fall in the US?
Interestingly the monetary policy of the Fed and other central banks have failed to raise the
inflation rates of their countries to the target level of two percent. This have raised doubts
on the theoretical foundations of conventional monetary theory and policy.
How far excessive liquidity creation can go? Limitless as the MMT claims or will there be a
break point, when things lead to a major financial market crisis?
We will see soon if the current policy conundrum prevails.
18 Rich Miller (2019), Fed Backs Organic Balance Sheet Rise, Wall Street Wants Whopper, in: Bloomberg,
September 29, 2019.
19 David Henry (2019), Too big to lend? JPMorgan cash hit Fed limits, roiling U.S. repos. in: Reuters,
October 1, 2019.
20 Woodford, Michael (1995), Price Level Determinacy Without Control of a Monetary Aggregate, in: Carnegie-
Rochester Conference Series on Public Policy. Vol. 43, 1–46. McCallum, Bennett T.; Nelson, Edward (2005).
"Monetary and Fiscal Theories of the Price Level: The Irreconcilable Differences, in: Oxford Review of Economic
Policy, Vol 21 (4), 565–583.