Register for the Emergency Briefing at https://www.nabers.com/repo
Today’s video addresses the question: Why did the banks need a repo bailout from the Fed? (2019 New Bailouts)
Read Caitlin Long’s excellent article on Forbes: https://www.forbes.com/sites/caitlinlong/2019/09/25/the-real-story-of-the-repo-market-meltdown-and-what-it-means-for-bitcoin/
Fed Repo Bailout Explained https://www.youtube.com/watch?v=ZiEjqNeYIHw
Repo Madness https://www.youtube.com/watch?v=6eO6yDOIc9s
Are These Really Bailouts? https://www.youtube.com/watch?v=JxSsC0SVaUQ
Coming up. This is a story about how systematically there are absolutely crazy things going on that are hidden behind complexity and PhDs saying things like nothing to worry about. Here. We’ve got it all calculated as experts. Ultimately re hypothecation is like a game of musical chairs. The banks are playing it, the banks know that they’re playing it and right now we have signs, the banks think that maybe the music’s going to stop and they should probably go ahead and secure their chair. And when the music does stop, we’re going to find out that a lot of people who think they own certain assets don’t really own them. Hey everybody, Jeff Nabers here. In previous videos we’ve covered what’s happening with these fed repo market bailouts. Are they really bail out? And in this video I want to cover the number one question that has been asked in the comments below those videos.
And that is why are these bailouts happening? Specifically, I want to speak to the underlying securities involved. So the federal reserve is giving banks money and the banks are giving the fed securities, in most cases a us treasuries. So the reason the fed has to step in and do these transactions is because the banks normally do these transactions with each other, but they stopped more specifically. Let’s look at the risk and the return involved in these transactions. So these underlying treasuries are earning a rate of return of about 2% annualized. They’re supposed to be viewed as having no risk as if the government has no chance of defaulting. But the reason the fed stepped in is because of the rate of these repo loans in the marketplace Rose to 10% so if you think about the banks involved in these transactions, they’ve got treasuries that make 2% yet they need money so bad, they’re willing to borrow at a rate of 10% on the other side of the transaction.
You’ve got another bank who takes a look at a risk free 2% and essentially is signaling to the marketplace that is not risk-free. I am not willing to take that 2% treasury unless you compensate an additional 8% for the risk. That is a very big spread. This is why it’s very alarming. So the real question is what do the banks know that we don’t know? What would cause these banks to go from viewing treasuries as no risk to viewing treasuries as having so much risk that they need 10% interest instead of two? Well, I’ve uncovered two possibilities here. Number one, for treasuries to truly be risk-free assets where at 2% interest rate would be reasonable for essentially no risk, then you’d have to believe that the government would never default on its debt and that we’ll always be able to pay its debt. Okay, well, when you look at the government debt, the debt is going up.
Now, that in and of itself is not really a bad thing because as long as it has the ability to pay it back, no problem. But the debt to GDP ratio would be staying flat. If the government’s ability to repay its debt wasn’t getting worse and worse. Unfortunately, what we see is that the government’s debt to GDP ratio is increasing, which means that with every dollar the government borrows, in other words, with every treasury bond, the government issues, the ability for the government to pay that debt back is getting worse and worse and less and less likely. Additionally, the information that is just sitting in plain view that most people don’t like to talk about is that the government’s debt is much bigger than its published figures. When you look at this chart, the blue bars and the debt is the debt that everyone talks about, but if you want to talk about the total debt, you have to include the unfunded liabilities.
The unfunded liabilities are even bigger than the published debt and if you include those, our debt to GDP ratio isn’t 106% it’s over 300%…
This is how The Repo Crisis is Getting Worse
It looks like the taxpayers are on a proxy spending spree again.
The repo market is in total chaos.
Is the repo market the canary in the coal mine, signaling the next financial collapse?
The new repo market timeline that proves this crisis is NOT going away is revealed, right here, right now!
Don’t be caught off guard like so many before Lehman Brothers went bust. Watch this video to the end , to make sure you have all the most recent intel on the repo market bailout (QE4).
It is crystal clear that the corrupt Fed needs to be audited again. The last time the Fed was audited, they’ve found 16 Trillion damage not reported to the public that the Fed gave away to the big banks and corporations for the bank bailout of 2008. Do not underestimate the Fed and Treasury. These corrupt people are capable of printing unlimited amounts of paper, and at this moment, they are anxious and concerned that their crooked elite-super-rich favorite candidate trump could end up losing the next presidential election. So they will continue to print re and more.
Welcome to The Atlantis Report.
It all started in mid-September when overnight, the rates in the repo market skyrocketed by an unheard of 400%!
The Fed stepped in and injected liquidity like they always do, which is a fancy way of saying they printed more money, which will cause future inflation and widen the wealth gap, and gave it to the banks and financial institutions.
Of course, Jerome Powell came out and said the repo market crash was nothing more than a “glitch” and was only temporary. In other words, nothing to see here, move along.
But you know from watching my videos, once they started QE, they can never stop, and this was the latest round (QE4).
But Jerome Powell was adamant that what the Fed was doing in the repo market was NOT QE.
Even though that was the exact textbook definition.
Why will the Fed never admit the continued repo market bailout is QE?
Because by admitting they have to start QE again, they’re admitting QE 1,2, and 3 failed.
The market would then lose confidence, and we all know the entire economy is built on debt, asset prices, and trust.
For the full transcript go to https://financearmageddon.blogspot.com
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recommended economic and financial books :
Destined for War: Can America and China Escape Thucydides’s Trap? https://amzn.to/33RwG52
How an Economy Grows and Why It Crashes by Peter Schiff : https://amzn.to/33Tk8Ky
Bitcoin: The End Of Money As We Know It https://amzn.to/31TXAqX
The Death of Money: The Coming Collapse of the International Monetary System https://amzn.to/2L2688q
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