The Reverse Repo Crisis $2 Trillion Nobody Understands
- Thread starter Viking
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We're not supposed to understand it.
The complexity and coded jargon, is obfuscation. They're HIDING what they're doing.
I wonder why...
The complexity and coded jargon, is obfuscation. They're HIDING what they're doing.
I wonder why...
reverse repos — WTF are they exactly?
Investopedia
A reverse repurchase agreement (RRP), commonly referred to as a reverse repo, represents a transaction where the seller agrees to repurchase securities at a higher price on a specific future date. A reverse repurchase agreement (RRP) or reverse repo involves selling securities with an agreement to repurchase them at a higher price at a future date, essentially functioning as a collateralized loan.
In RRPs, while the buyer temporarily holds the collateral, control and ownership do not typically transfer unless default occurs.
An RRP differs from buy or sell backs in a simple way. Buy or sell back agreements legally document each transaction separately, providing clear separation in each transaction. This way, each transaction is independent and enforceable on its own. In RRPs, each phase of the agreement is documented in the same contract, ensuring all phases are enforceable.
When the Federal Reserve uses a reverse repo, the central bank initially sells securities and agrees to buy them back later. In these cases, the Fed borrows money from the market, which it may do when there is too much liquidity in the system.
Investopedia
A reverse repurchase agreement (RRP), commonly referred to as a reverse repo, represents a transaction where the seller agrees to repurchase securities at a higher price on a specific future date. A reverse repurchase agreement (RRP) or reverse repo involves selling securities with an agreement to repurchase them at a higher price at a future date, essentially functioning as a collateralized loan.
In RRPs, while the buyer temporarily holds the collateral, control and ownership do not typically transfer unless default occurs.
An RRP differs from buy or sell backs in a simple way. Buy or sell back agreements legally document each transaction separately, providing clear separation in each transaction. This way, each transaction is independent and enforceable on its own. In RRPs, each phase of the agreement is documented in the same contract, ensuring all phases are enforceable.
When the Federal Reserve uses a reverse repo, the central bank initially sells securities and agrees to buy them back later. In these cases, the Fed borrows money from the market, which it may do when there is too much liquidity in the system.
A fine paradigm of Financialization.
Which itself is like a three-cup shell game. Make it moar and moar complex, to cover greater and greater theft.
Which itself is like a three-cup shell game. Make it moar and moar complex, to cover greater and greater theft.
