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> Like what if I'm one of the institutions waiting on the sidelines to make some money off of short term lending and the Fed keeps tamping down on what could be
by bransonf 7y ago
> Like what if I'm one of the institutions waiting on the sidelines to make some money off of short term lending and the Fed keeps tamping down on what could be a source of profit?
That's the problem. If you are one of these institutions, you're setting your interest rate much higher than is healthy for the repo market.
- internet_user 7y ago..but the omniscient Fed knows better than the market? Is that what you are saying?
- bransonf 7y agoWell, they're part of the market. They have their judgments just like every other entity in the market. They use their best judgement to know that the repo market needs a cash injection. They're not infallible, but as regulators... their job is to regulate.
- SCAQTony 7y agoNonetheless, $200-billion has been added to the money supply. (See FRED M2 Index link below from September 19 to the present) $200-billion could have been implemented for more worthy projects than the repo market. In my opinion, the FED needs more oversight from Congress and/or the Treasury. https://fred.stlouisfed.org/series/M2 https://fred.stlouisfed.org/series/M2