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U.S. Fed accepts $756B in daily reverse repo operation

reuters.com

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Re: U.S. Fed accepts $756B in daily reverse repo operation

#101

Post by [deleted] »

thereare5lights wrote: post #36
znt wrote: post #31

Earlier quoted context omitted.

It is fake. The thing is is your average American would never even consider the ultimate possibility of a foundational collapse of their economy and currency. And it's not just the average American. Nearly all hedge funds etc have USD as their basis. Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars. You open up your portfolio and be happy when the USD value goes up in a nice green…

> Debasement of currency marked the end of the Roman empire, why would American empire be any different? The fall of the Roman Empire had so many causes that to attribute it to one thing is misleading at best.

[deleted]

Re: U.S. Fed accepts $756B in daily reverse repo operation

#102

Post by j1vms »

Geee wrote: post #78
enraged_camel wrote: post #14

This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.

This is what happens when a central authority is controlling the economy. Everyone should know that free markets can allocate resources better than any central planner, but still somehow those economists think that we need central bank policies to control the whole thing. Central planning might be appeling idea especially for those who benefit from it, and provides unlimited avenues for complex economic theories, but…

> economists think that we need central bank policies to control the whole thing (...) but it just doesn't work in the long run.

Roughly speaking, a central authority might work in certain scenarios, for a short time, to prevent situations where market participants might otherwise panic.

In the long run, the problem is the same authority does not have to all "local", decision-making information available to the individual market participants, and that might prevent the economy from reaching an optimal configuration.

Re: U.S. Fed accepts $756B in daily reverse repo operation

#104

Post by bubbleRefuge »

Geee wrote: post #78
enraged_camel wrote: post #14

This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.

This is what happens when a central authority is controlling the economy. Everyone should know that free markets can allocate resources better than any central planner, but still somehow those economists think that we need central bank policies to control the whole thing. Central planning might be appeling idea especially for those who benefit from it, and provides unlimited avenues for complex economic theories, but…

Not a central planned economy. The fed sets interest rates to attempt stabilize the economy in terms of unemployment rates and price stability. The congress spends money in a Keynesian fashion to smooth the business cycle. Other than that, the economy goes where the actors in the economy, the corporations and consumers, want it to go within the rules.

Re: U.S. Fed accepts $756B in daily reverse repo operation

#105

Post by testfoobar »

mistrial9 wrote: post #87
testfoobar wrote: post #53

Earlier quoted context omitted.

Sec. Yellen is operating close to the debt ceiling. It will take an act of Congress to remedy this. https://www.rollcall.com/2021/06/14/democrats-have-no-easy-o...

Q. How many US Presidencies have "operating close to the debt ceiling" and needed an "act of Congress" to continue on.. factual answers please, partisans

Wikipedia is your friend:

https://en.wikipedia.org/wiki/History_of_United_States_debt_...

Re: U.S. Fed accepts $756B in daily reverse repo operation

#106

Post by bubbleRefuge »

znt wrote: post #31
enraged_camel wrote: post #14

This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.

It is fake. The thing is is your average American would never even consider the ultimate possibility of a foundational collapse of their economy and currency. And it's not just the average American. Nearly all hedge funds etc have USD as their basis. Bitcoin, Gold, Stocks, real estate etc has a value tag that's denominated in Dollars. You open up your portfolio and be happy when the USD value goes up in a nice green…

I think for as long as the rest of the world wants to export its goods and services to America in exchange for dollars. Maybe a better question is who in the world wants to be the importer of last resort ? Who wants to run trade deficits ? Trade deficits are a real benefit to the importer and real cost the exporter, but it seems the rest of the world doesn't get this. They want to manufacture using sweatshops, polluted air, local natural resources, so that we can have our Iphones and Teslas and they can have electronic digital dollars in the bank. We should keep doing this till they stop.

Re: U.S. Fed accepts $756B in daily reverse repo operation

#107

Post by testfoobar »

qeternity wrote: post #64
testfoobar wrote: post #51

Reverse repo is where money goes to die 24 hours at a time. It isn't the opposite of QE because it is a 24 hour operation that reverses at the end. But string a lot of 24 hours together and you get something that behaves like Quantitative Tightening during the duration.

Except that it’s opt in based on liquidity needs, which is very different than tightening.

It isn't exactly tightening. But the RRP facility does drain liquidity in 24 hour segments. It presents an interesting risk.

Here is a quote from a paper at the Federal Reserve itself from 2015:

https://www.federalreserve.gov/econresdata/feds/2015/files/2...

"However, a facility that could allow a very rapid and unexpected expansion of ON RRP might exacerbate disruptive flight-to-quality flows during a period of financial stress and thus could undermine financial stability. Market observers and policymakers both have described such risks. For example, the Minutes of the June 2014 FOMC meeting state that “[m]ost participants expressed concerns that in times of financial stress, the facility’s counterparties could shift investments toward the facility and away from financial and nonfinancial corporations, possibly causing disruptions in funding that could magnify the stress” (FOMC 2014a). "

Re: U.S. Fed accepts $756B in daily reverse repo operation

#108

Post by logicalmonster »

bob33212 wrote: post #32
enraged_camel wrote: post #14

This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.

It is fake in the sense that billions of dollars are being minted by crypto without any real use case other than theoretically fixing the financial system "someday". But fake stuff has always been a big part of the economy. Realtors extract 6% of most real estate transactions, but provide minimal "real" value, for example. The important thing is that inflation isn't running away and also businesses are not shutting d…

No running away inflation? According to what? CPI?

Many people who live in the real world know that CPI is a garbage measure of inflation and life is increasing in price faster than they say.

CPI doesn’t even measure the right thing: inflation is a monetary, not a price phenomenon. It’s not things getting more expensive, it’s the value of money growing less. But they don’t publish the m2 money stock charts any more. Wonder why?

Re: U.S. Fed accepts $756B in daily reverse repo operation

#109

Post by bubbleRefuge »

lotsofpulp wrote: post #75
bob33212 wrote: post #32

Earlier quoted context omitted.

It is fake in the sense that billions of dollars are being minted by crypto without any real use case other than theoretically fixing the financial system "someday". But fake stuff has always been a big part of the economy. Realtors extract 6% of most real estate transactions, but provide minimal "real" value, for example. The important thing is that inflation isn't running away and also businesses are not shutting d…

> billions of dollars are being minted by crypto This makes no sense, if only because the US government is the only entity that can “mint” US dollars. More directly, just because the brokerage website says you have $x worth of an asset based on multiplying quantity of the asset times most recent sale price of a unit of that asset, unless you can trade it and deposit the cash into your account, you do not have $x.

Good point. I think the financial community has created a false sense of legitimacy for bitcoin by quoting its prices on front pages, displaying performance graphs, etc, as if BTC were as legit as stocks, bonds, and other financial instruments.
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