Why would you have your RRP rate above your min FFR target and then not understand why MMMFs won’t fully engage in Tsy markets?
How stupid are these f-ing people?
When Fed did RRP in the first place they created a competing risk free asset class to Tsy securities which was bad enough… but then set the rate higher than your min target?
#Fed officials are mulling a 5 bps cut to the reverse-repo rate to align it with the lower end of the federal funds target range. Nov meeting minutes highlight this as a "technical adjustment" to control the benchmark rate. RRP usage: $148.8B on Tue.#Fed #FOMC #Powell #inflation pic.twitter.com/QVDV6FlIMD
— Rymond_Inc (@rymondIncKenya) November 27, 2024
So what’s going to happen is these Art degree monetarist morons are going to cause an auction failure and then all the other Art degree debt doomsday morons are going to go running all around saying “ no one will loan the US any more money! … no one will loan the US any more money! … “
You watch…
Un-fucking-believable.
ReplyDeleteShort to long transformation isn't usually a problem. The UK system has been doing that for 25 years successfully with repos. But why a preannounced rate on the cash management repos rather than tenders?
ReplyDeleteBecause they have to have the RRP with a near equivalent rate as a “reserve drain” otherwise all those reserves they “injected in!” (textbook Monetarism 101) will have to flow towards Depisitiries and we are back at Sept 2008 and March 2020 again where they shut down the credit function and crash the whole thing again
ReplyDeleteThe proportional regulatory ratio is (A-L)/A so when the morons “inject money!” reserves flow uncontrollably towards the Depositories… A increases (reserve assets) and L increases (deposit liabilities) so delta (A-L) = 0… numerator unchanged… but A increases uncontrollably in the denominator and the ratio falls below regulatory minimum… whole thing crashes …
ReplyDeleteSo they created this RRP thing as an alternative “reserve drain” to avoid another crash …
ReplyDeleteBut they offering 4.55 in RRP and the min target is 4.50 and they see FFR above 4.50 and think it’s “predicting inflation!” or some other art degree monetarist insane shit..
ReplyDeleteIt’s like they are offering 2 alternative they are offering 4.50and 4.55 and people ofc take the 4.55 and these morons are like “hey! Why didnt you take the 4.50?”
ReplyDelete