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Thursday, January 13, 2022

Future RRP rate

 

You knew this guy was going to have to change his view…



This part here:


RRP % has to be at or ABOVE any alternative to avoid a catastrophic flow of reserve balances into Depositories…. That’s why access to it had to be expanded in the first place…

Fed gets a 👍 (so far)…

But he says they are doing it to provide “structural support” (figurative language) to Money Market funds…  they are doing it to avoid creating a financial incentive for current RRP $1.5T of system reserve balances to flow into Depository asset accounts which would crash the whole thing again…  like they did in September 2008 and March 2020…

Accordingly it would be best if Fed were to as quickly as possible reduce system reserve balances to a point where this Rube Goldberg RRP account goes to zero… they need to get on with “QT” (to them) as quickly as possible… the monetarist inflationista dummies should applaud this…





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