ECB Failed Fixed-Term Deposit Auction

Right on cue, as soon as I write a post saying that big stuff happens when I’m away, a significant story:  ECB Fixed-Term Deposit Auction fails.  What does this mean?  Well, although I don’t have a PhD in economics, allow me to explain it to you in layman’s terms:  the ECB’s attempt to “sanitize”  (EDIT:  correction:  STERILIZE – see, if only I had a PhD in economics…) their bond purchases – they were going to distribute capital by buying bonds, and then remove capital by selling term deposits, so that no net money was created – failed.   The banks didn’t want to buy ECB term deposits with their precious money.   Why?  Well, it seems that liquidity is pretty pretty pretty tight right now in Euro-land… I don’t think that could ever be considered a good thing.
ok – have at it in the comments – I won’t be able to respond, but maybe Kartik Athreya will stop by and tell us mortals how to interpret the failed term deposit auction.
-KD

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