The famous repo rate → and this was in September → this market provides the cash for the big banks → they can do their daily operation.
When the cash does not flow → the general economy is going to do bad.
And this is what happened in September → which banks are messing up? → we do not know….
Two people, → one wants to invest and gain money → Mark does not have cash → but the treasury
These are US → bonds → basically we are going to loan money to the US government → they are safe → but the rates are lower → and there are three.
They are T-Bills → 4/16 weeks and more → these are just financial instruments for making money → off the money we already have.
T-Bonds → are long → and 30 years!
But Mark is going to resell them in 101 → so women making dollar profit.
Repo rate → this can be 0.1 as well → or even lower or higher.
Fast money → the REPO market → no risk make money.
These are HEDGE FUNDS and BANkS → they are huge organizations.
Mostly overnight → large scale.
Trillion dollars → the rates spiked → for example 9 percent → this means that they are going to get the money back as 900 dollars → but they are not going to do this why?
THEY ARE NOT GOING TO GET THEIR MONEY!
So the guy → offered more and more → something is going wrong.
And the FED came in.
They gave the money → there are two deadlines.
Even the banks are in the REPO market → they are doing the tax stuff → hence the liquidity was not good.
More money was gone → another rule → the rule was after 08 → reserves in cash. (we need this rule to observe shocks).
We mostly need it.
Keep does money on hold → and the banks are saying → LOWER THIS RATE → SO WE CAN MAKE MONEY! (we are not going to revisit those rules → this is not going to happen)
We are going to inject money → rather than lowing the amount.
So a lot of money is going to flow in → INFLATION!
So many funds are coming in.