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Where do you think your money go when you buy a share in MMF? They do not disappear, instead they get added to bank deposit of one who sold you the share. It wi
by fuoqi 3y ago
Where do you think your money go when you buy a share in MMF? They do not disappear, instead they get added to bank deposit of one who sold you the share. It will be different only if the bonds which back your MMF are sold by the Treasury or the Fed.
- s1artibartfast 3y agoThe US treasury sold ~$1 Trillion in IOUs to private individuals in Q1. While Individuals trade back and forth, this represents a net outflow. https://home.treasury.gov/news/press-releases/jy1231 https://home.treasury.gov/news/press-releases/jy1231
- fuoqi 3y agoThe treasure would've sold them regardless of your investment into a MMF, just for a slightly higher price. So counterintuitively enough, by investing into a MMF your actually reduce amount of deposits lost by banks.
- s1artibartfast 3y agoA bank buying investments assets doesnt change the reported deposits. It isn't the net sum of (customer account balance - investments the bank makes/purchases). Deposits are just the first.
- projektfu 3y agoMoney market funds expand and contract their holdings to maintain an NAV of 1.00. The money will go to buy treasuries, commercial paper, repo, etc.
- safog 3y agoI'm not sure of the mechanics, I know for a fact that most people are moving $ to brokerages and parking it in something like VMFXX (or equivalents in Fidelity etc.) Do you know what the mechanics are when you put some money in to VMFXX? Who does vanguard get the treasuries from?