Reverse repo has been over a trillion every day for a few weeks now. While it is at an all time high, I'm not sure its a good indicator of market crash.
Now if you want to look at inflation rates, other traditional markers of market crash, they're all just as fucked.
Also Chinese banks are in the process of defaulting this week, and their stock market is completely halted until Wednesday.
My understanding of reverse repro is that the feds sells you securities (like bonds) with an agreement they'll buy it back from you at a higher (agreed upon) price.
So, cash that is floating around is sold to the fed over the open market.
The part that's confusing is that the immediate effect is to combat inflation. But when the fed buys back the shares, they are essentially printing more money. Also, the people participating get guaranteed profits (otherwise they would have no reason to participate).
I'm assuming that once the parties reap the profits when the treasuries come due, they'll park their cash with the Fed again for more profits. It's just one big shell game.
Reverse repo has been over a trillion every day for a few weeks now. While it is at an all time high, I'm not sure its a good indicator of market crash.
Now if you want to look at inflation rates, other traditional markers of market crash, they're all just as fucked.
Also Chinese banks are in the process of defaulting this week, and their stock market is completely halted until Wednesday.
Should be a spicy meatball
My understanding of reverse repro is that the feds sells you securities (like bonds) with an agreement they'll buy it back from you at a higher (agreed upon) price. So, cash that is floating around is sold to the fed over the open market.
The part that's confusing is that the immediate effect is to combat inflation. But when the fed buys back the shares, they are essentially printing more money. Also, the people participating get guaranteed profits (otherwise they would have no reason to participate).
I'm assuming that once the parties reap the profits when the treasuries come due, they'll park their cash with the Fed again for more profits. It's just one big shell game.