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What's up with the Repo rate?

Discussions about the economic and financial ramifications of PEAK OIL

Re: What's up with the Repo rate?

Unread postby Revi » Mon 13 Jan 2020, 09:47:55

I was wondering what the reason was for the desperate attempt to hold down the repo rate. It turns out that treasury bills are rehypothecated, in other words there aren't enough of them and 2.2 people think they own each one. It's like musical chairs and the banks know it. When the music stops someone is going to be holding the treasury, and someone is going to be without one!

https://www.silverdoctors.com/headlines ... po-market/
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Re: What's up with the Repo rate?

Unread postby Outcast_Searcher » Mon 13 Jan 2020, 16:16:58

Revi wrote:I was wondering what the reason was for the desperate attempt to hold down the repo rate. It turns out that treasury bills are rehypothecated, in other words there aren't enough of them and 2.2 people think they own each one. It's like musical chairs and the banks know it. When the music stops someone is going to be holding the treasury, and someone is going to be without one!

https://www.silverdoctors.com/headlines ... po-market/

Ah, quoting silverdoctors again. Such a wonderful source for credible, unbiased, economic information. As per usual. :roll:

So does everyone who loans a book think there are now multiple copies of that book? :!: Or rents a building? Or deposits a dollar in a bank? Or endless other examples?

If doom equated even remotely to endless doomer handwringing -- especially the CLEARLY self-interested misrepresentation time, THEN we'd actually have plenty to worry about.

But in reality, it doesn't, just like it hasn't for the several decades I've been paying attention re doomer track records.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: What's up with the Repo rate?

Unread postby Revi » Wed 15 Jan 2020, 15:06:43

Thanks for the review Outcast. At least I know somebody is reading my posts!

It's an interesting idea. Maybe confidence in T-bills has evaporated. We're at the end of a cycle.
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Re: What's up with the Repo rate?

Unread postby jedrider » Wed 15 Jan 2020, 17:07:05

Well, if McPherson is right that we'll all be dead in ten, fifteen years, then all is fine, as the last men standing will care less about the empty value of their equities. It's a good endgame strategy I would say. If you think you are going to live a long time, then you will save and not cash out. No?

Anyway, with all that cash, what can you do with it? Give it to somebody else who already has lots of money? The money will just stay in the same place as just digits in a computer memory.

In fact, the last thing you would want to do is redistribute the money to someone who will need to spend it. That will 'actualize' the money and we all know that the amount of money and of debt, is far larger than it's actual value.

Seems like their plan is working, so far.
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Re: What's up with the Repo rate?

Unread postby Revi » Fri 24 Jan 2020, 14:40:14

I think we're around 425 billion at this point, but it's maybe going to ramp up to 80 billion a month which takes us to almost a trillion a year soon. I guess it's a new QE to infinity and beyond! That's going to juice up the stock market!
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Re: What's up with the Repo ratet

Unread postby Outcast_Searcher » Fri 24 Jan 2020, 17:46:49

Revi wrote:I think we're around 425 billion at this point, but it's maybe going to ramp up to 80 billion a month which takes us to almost a trillion a year soon. I guess it's a new QE to infinity and beyond! That's going to juice up the stock market!

As if things never change. If they actually spew out a $trillion or more total by fall and show no sign of it abating, THEN there will be real cause for concern.

So for for 2020, the Fed balance sheet trend is back to shrinking. (Shhh. The usual fast crash cheering / FUDding suspects won't like hearing that).

(You can zoom on the graph, and click the +more link under observations near the upper left, to see the weekly numbers for the past month). It looks like we're down roughly $27 billion for 2020. Not exactly on pace for $80 billion increases a month.

https://fred.stlouisfed.org/series/WALCL

And of course, the Youtube arm wavers claiming the Fed would "totally lose control" by November weren't exactly right. 8O :roll:

But I suppose as long as for any event continues, as usual, the usual patrol of doom can tell convincing tales of FUD -- they're doing their "job". :idea:

As usual, I'll go with the credible sources and the actual data and trends, re the Fed and actual professional economists.

In the real world, the terms of the vast majority of the funds being injected are 1 to 3 day loans. So it's NOT like this money is just all endlessly being pumped into, and left in the economy to slosh around (not that the arm wavers are going to point that out, or likely even understand it given their lack of understanding of economics (re past claims) in general.

https://apps.newyorkfed.org/markets/aut ... 01/01/2000

Meanwhile, the overall SOFR market remains quiet enough re both rates and volumes to be positively sleep inducing. Not exactly a sign of market panic, much less stress.

https://apps.newyorkfed.org/markets/autorates/sofr

This piece looked pretty decent / balanced re trying to understand what is actually going on, and what may happen going forward.

Since we don't know, naturally bulls and bears will claim what's likely to happen is very different.

https://www.marketwatch.com/story/here- ... 2020-01-04
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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