The repo market disruption: What happened, why, and should something be done about it? – Part 1

On Thursday, December 5, the Hutchins Center on Fiscal and Monetary Policy at Brookings hosted an event to discuss what happened in the repo markets in September and why — and what, if anything, the Fed or other regulators should do about it.

https://www.brookings.edu/events/the-repo-market-disruption-what-happened-why-and-should-something-be-done-about-it/ (transcript available)

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The Federal Reserve just injected over 1 BILLION into the Repo market in just 2 days.

Are the banks in trouble? Do they have enough liquidity? Do the banks have enough reserves? Is the stock market being propped up directly because of the fed printing more and more money?

The fed has increased their repo market activity tremendously since September. This increased activity in the repo coupled with multiple rate cuts per month can’t mean the economy is doing well.

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37 thoughts on “The repo market disruption: What happened, why, and should something be done about it? – Part 1”

  1. The so called unknown events that is tax dates and treasury auction dates are recurring, well known and predictable. The market mechanism broke down and may still be broken hence the ongoing need for the facility and some say the facility should be permanent. Unfortunately always in secret. The institutions that were in trouble should have had to pay the price like any other speculator. Something is obviously broken and it is too big to fail broken. So tax payer dollars will be spent to save those Oligarchs. More QE is necessary. It is true that regulators are always captured by the regulated. The Fed takes better care of the Bankers then the citizens of the country. Their policies have decimated pensions across the whole spectrum and impoverished senior citizens as well as those saving up but no banker has missed a beat.

  2. South Philadelphia

    The Fed is doing to this to keep short term rates down. This is not normal . Martin Armstrong a true economist knows this is the next Crisis that's unfolding. These PhDs clowns know nothing.

  3. Counterfeiting a Fiat currency in a fractional reserve banking system will wreak havoc! Oh you have to look in the past Weimar Germany Zimbabwe both inflated the currency into infinity!

  4. Joseph Sansevero

    What is the repo market please refer to wikipedia or an expert in this area Bernie Madoff. What is really wrong I am guessing you can't tapper a Ponzi Scheme ask Bernie Madoff and what happens when it tappers. Maybe the sheep notice they will be slaughtered.

  5. 17:30 – if occasional overnight interest rate spikes are normal, then why is the Fed so eager to provide intervention? What happened to the common sense notion of averting the glaring moral hazard and letting the market dictate the true cost of short term capital… or can’t the banks be trusted to figure this out? The Fed’s actions are an unnatural dystopian disruption in confidence… resuscitating zombie institutions while slaughtering price discovery. How could you not know?

  6. Don't let them use this to change the leverage ratio requirements. Don't let Jamie Dimon scare everyone to change this. His statement that they had the funds to step into the market to fill this gap but wasn't able to due to reserve requirements is a lie. If they had the funds available, they would have stepped in. The fact that you had funds but were allocated to reserves (by mandate/law), doesn't mean you have or should have these available for other investment allocation. This is how the system works and it is telling us that we are in a liquidity trap and the ongoing and forecasted $2 plus trillion deficit will not go unnoticed and quietly through the system. The FED could easily and quickly lose control of both short and long term rates. September 17/18 was just a warning sign, a symptom, not the cause.

  7. "It was just a glitch. One in 375,000,000,000,000 chance of it ever happening again. This is true – we're smart and have really big computers. See – it's all good. Now…go about your daily business and let us take care of this non-problem. Thank you – have a grand day."

  8. fandango costner

    25 minutes in and all I’ve heard is, it’s normal. I guess we’ll see how big the balance sheet gets. All normal and expected. Ok. Thanks PhD’s

  9. Yasira Osiris

    Huuuge insurmontable debt bubble!!!! Shut the Fed and all the criminal banks – NESARA- GESARA NOW Full disclosure NOW –

  10. THE SPIKE IN THE REPO RATE BY 8 TO 900 BASIS POINTS has a one in 2 billion chance event evaluation no problem here folks

  11. When the real reason comes out that there was a bank or banks that were in trouble and acting fraudulently and other banks refused to lend to them, will Brookings be judged as misinformed or deliberately misleading?

  12. For those in the know, where do the 100's of billions eventually wind up that is being pumped into the market? at the end of the day who puts those dollars in their pocket? thanks

  13. Great Video!!! that makes me really excited, today is 12/12, the fed pumped 111.9 billion in one day, and another 200 billions in last week, the great shoot is coming !!!

  14. cant print your way to prosperity =hyperinflation ……the credit/debt based society is on life support now lol

  15. If I remember 2008 properly, the Fed acts like this to correct liquidity problems, and that problem is due to the collapse of a speculative bubble of some kind somewhere in the world.

    What could be collapsing right now?

  16. Finally a finance channel that talks sense! Subscribed and liked, this is the real information that people need!

  17. This just means Fed printed and gave to the banks $234Billion to help them out for their mismanagement. This also means that your dollar value just got devalued by $234Billion, which means your purchasing power just got decreased by that amount, a.ka. inflation. Isn't it nice how the Fed just makes it sound like no big deal! The Fed does this of course because the Fed Reserve is a privately owned Central bank and they just want to help themselves. That's right folks. Fed Reserve is a privately owned bank by private individuals, (not federal) and there are no reserves (just printing press to print money for their own gain, aka counterfeiting if you and I did this.). We need to get rid of all Central Banks.

  18. Who said economy doing so well? Stock lean on high? Trump bragged about stock market & jobs number? While manufacturing really suffer with alot of bad data, yield slump very low.

  19. Finaly someone that uses his brain! I have a hard time being around people as they can't think for themselves. I'm surrounded by walking zombies! People are conditioned in a rut. I'm glad I found your channel. You speak my language. Keep it up!

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