Posted on 12/11/2019 4:24:33 AM PST by Freeport
” Is this the government “creating” money ...”
The FED is NOT a GOV’t operation - it’s the Rothschilds, Rockefellers etc
‘am I missing something?
END THE FED!!
I thought that just because it is something routine I have never heard of before. Sounds like much ado about bery little.
I thought they put an end to this QE (quantitative easing, or is it qualitative?) to prime the pump of the stock market. The need for it has long since passed. It dries up money supply for private capital. Get the gubmint out of the market.
The repo market is used to fund short-term corporate borrowings. Banks used to be the market makers for the repo-market but that ended with the last recession. The repo market blew up with the implosion of Lehman Brothers (Money Market funds were heavily invested). To comply with Basel rules banks need to hold a specific amount of government debt as it is ruled super safe, so they no longer have the spare capital to support the repo market. In the meantime corporations have been borrowing heavily to fund stock buyback programs. I suspect hedge funds have been parking money in these bonds while looking for suitable investments.
We are probably seeing hedge funds rebalancing
I have been saying a number of times before, neither the stock market nor the housing market will be the breaking point of the comencement of the next financial crisis. It will be debt, all of it.
It has to be. Many kinds of debt is currently sold and held by its buyer as an “asset”. When you look at all the financial balance sheets you find far too much of the “balances” are propped up by debt, to an extreme. It will break, and like a snowball it will all run down hill, eating up real assets needed to cover debts that cannot be covered any longer.
They are creating dollars out of nothing. Whether this “money” moves in the economy is what controls whether it actually devalues the dollar or not. Very few people know, I think.
The new liquidity rules, passed after 2008, incentivize banks to hold their excess reserves at the Fed instead of lending them overnight to earn a little more interest.
If it's the former, then the Fed should just stop
The Fed has always intervened when the overnight rate is above or below their target rate. The only difference, recently, is that banks have nearly $1.4 trillion in excess reserves that they're holding.
Yes.
Is the government creating inflation to inflate the numbers and give the illusion that the economy is expanding?
Real GDP numbers are adjusted for inflation.
Repos are overnight loans, not trades. The collateral is usually Treasuries or insured MBS.
‘am I missing something?
Yes.
Yup.
Like I said the IB’s are running out of those secure securities so the Feds are now stepping in.
Like the above, rates are going higher because the IV Bankers no longer have enough of the secure securities to trade overnight
How much did they used to have? How much do they have now? Link?
I’m hoping this is a good place for a question that bothers me:
The deficit is X amount of dollars. Everyone talks about the necessity of reducing that amount. Yet, it never goes DOWN, only up. Question:
Are payments ever made to reduce it. Is that how it is reduced, because it is infuriating never to see the damn thing go down...even a dollar.
Don’t judge me for being ignorant.
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