Black ink in the federal budget is good news for almost everyone except Wall Street. The government's new surpluses are a pain in the neck for the financial institutions that have come to depend on the deep pool of Treasury securities that were issued by the government to cover chronic deficits. Pension funds use long-term Treasury bonds to cover payouts to future retirees. The Federal Reserve controls the money supply by temporarily buying Treasuries from banks or letting its purchases from them expire, as needed. Hedge funds and other traders finance their speculation through the huge Treasury repo market.
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