On and off I have been taking jabs at the Fed’s reverse repo program while it was still in the test phase and still relatively small. But written in invisible ink on the latest Fed statement was the approval of the of the reverse repo program to its full-blown and intended expansion to the money markets at a rate of $88Bn per month, as reported by Reuters last week. The Fed in effect is open-endedly selling assets at a larger clip than it conducted QE3 which was $85Bn at its height.

So, if you’ve been wondering about the down trend in equities lately, on top of the central banker chatter of a looming interest rate hike, there appears to be a pretty good explanation for it.

Explaining why the Fed is doing this at this particular point in time is another matter entirely. And I won’t go there because I seem to get into trouble when I do. This time I will let the facts speak for themselves regarding the degree of responsible monetary conduct that may exist here. But I will venture to say that NGDP will likely be trending lower very soon, and I am not sure we can afford that given its low level over the last several years.