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“The scheme was a seemingly innocuous change to the financial system’s plumbing that may, just under a decade later, be having a profoundly destabilising impact
by jkhdigital 4y ago
“The scheme was a seemingly innocuous change to the financial system’s plumbing that may, just under a decade later, be having a profoundly destabilising impact on banks.”
Innocuous only to the fools at the Fed, I suppose. Outlets like ZeroHedge have been watching this for years, carefully documenting the transformation of the RRP facility from an “emergency” stabilization measure into a deposit roach motel.
- thwayunion 4y ago"seemingly innocuous" is an impersonal construction referring to the reader, but not any reader in particular. The Fed itself, at least some presidents thereof, was aware of this risk. Toward the end of the article: "When the reverse-repo facility was set up, Bill Dudley, president of the New York Fed at the time, worried it could lead to the “disintermediation of the financial system”. During a financial crisis it could exacerbate instability with funds running out of riskier assets and onto the Fed’s balance-sheet."
- kragen 4y agobut zerohedge has predicted 932 of the last 3 financial crises
- jkhdigital 4y agoThere's plenty of garbage on that site but their "how-the-sausage-is-made" reporting on the financial system is second to none. I recall reading ZH articles about this back in March 2021 when the SLR relaxation ended and that analysis is still spot-on two years later.
- HDThoreaun 4y agoWaiting for years means you were wrong in finance.