Ned's twister algorithm is bothering some bankers

Apparently this is something that the Fed, which until recently was engaging in additional liquidity draining via QT, was unaware about, and since a return of QE - something that Trump has yet to demand - would cause all sorts of political problems and demand lengthy congressional explanations, the BofA analysis was one of the various factors cited for the dramatic rebound in the market starting on Tuesday, which promptly transformed into the strongest 3-day rally of the year.
Well, it's no longer just Bank of America that believes the Fed may be forced to pursue QE to replenish the sudden drain in interbank liquidity that would accompany such a dramatic cash rebuild by the Treasury.
In the latest Flows and Liquidity report from JPMorgan's Nikolaos Panigirtzoglou published late on Friday, the strategist analyzes various components of market liquidity and concludes that "liquidity will likely continue to tighten gradually in the US banking system even after the Fed has stopped its balance sheet shrinkage."

Ned's plan to borrow long and deposit short suddenly piles a bunch of liquidity in Treasury accounts, draining it elsewhere. Depositors have to rescale to adapt. But that is what currency banking is about, getting deposits and loans to match return to scale.