Why the reverse repo market is more important than
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Posted On: 05/24/2021 8:31:44 PM
Why the reverse repo market is more important than Basel III and what is happening now!
Due Diligence
A week ago I posted an explanation of the repo market and what a reverse-repo is. Zero-hedge just posted an update stating that the reverse-repo market is fast approaching 400B in overnight parked dollars at the FED.
https://www.reddit.com/r/Wallstreetsilver/com..._means_to/
IMO Zero-hedge is mis-interpreting what is really going on; so let me explain. This has HUGE implications for inflation and the price of silver.
When banks engage in a reverse repo they are unloading excess dollar reserves short term for treasuries. Now, historically, they do this to gain a bit of over-night interest and make a few bucks when they are cash rich. However, the past week, there have been instances where they are parking cash at negative interest rates which means - they are PAYING the FED to take their dollars!
So what is really going on? Zero hedge missed the real rationale. 1. We have "real" negative interest rates now with inflation above interest rates. Therefore, dollars have a carrying cost as they are inflating away. 2. The FED has been printing tonnes of money - but has heretofore, kept it in the hands of banksters. Now they have too much money and nothing to spend it on since they are not loaning money to the population. Therefore, this IMO is the canary in the hyper-inflation coal mine. They have too much cash which they know is inflating away.
Instead of the "dollar milkshake theory" which was just a temporary explanation of a short term phenomenon...the dollar surplus is going to go world-wide very soon (remember - all the Petro dollars will soon be coming home to roost!). So quicker than you can blink an eye the dollar will become toxic.
This is the real buttress of Basel III. I think Basel III's real motive is to allow banks to move toward another reserve to pass stress tests in the event of a massive dollar devaluation. Imagine if the dollar's value collapses 30% - now suddenly we don't have a reverse repo problem because they need 30% more dollars to meet reserve requirements - but if the dollar keeps collapsing they want out.
Gold will be the savior because, not only is it real money - but also they can reset the price to any number they need to stabilize the banking system.
That my fellow apes is the endgame. Silver is not part of this game - but it will become the single most sought after wealth protection commodity world-wide among the general population.
We have been here 2 months - if you are not stocked up on physical silver in your OWN possession you are retarded - in a bad way. Train is leaving the station soon folks. Climb aboard the silver express!
EDIT: BTW without doxing myself, I have a PhD in a business related field and taught in some very prestigious business schools. I am now semi-retired. I wanted to make one final point. Now you apes know why the so called intellectuals have been talking MMT. That is just a cover with sexy sounding verbiage to explain what I just detailed above. They printed too much money and don't know what to do with it.
Follow the RRP market over the next week or so to see if the FED has a temporary fix. Nonetheless, it is only a matter of time...
More here:
https://www.reddit.com/r/Wallstreetsilver/com...urce=share
Due Diligence
A week ago I posted an explanation of the repo market and what a reverse-repo is. Zero-hedge just posted an update stating that the reverse-repo market is fast approaching 400B in overnight parked dollars at the FED.
https://www.reddit.com/r/Wallstreetsilver/com..._means_to/
IMO Zero-hedge is mis-interpreting what is really going on; so let me explain. This has HUGE implications for inflation and the price of silver.
When banks engage in a reverse repo they are unloading excess dollar reserves short term for treasuries. Now, historically, they do this to gain a bit of over-night interest and make a few bucks when they are cash rich. However, the past week, there have been instances where they are parking cash at negative interest rates which means - they are PAYING the FED to take their dollars!
So what is really going on? Zero hedge missed the real rationale. 1. We have "real" negative interest rates now with inflation above interest rates. Therefore, dollars have a carrying cost as they are inflating away. 2. The FED has been printing tonnes of money - but has heretofore, kept it in the hands of banksters. Now they have too much money and nothing to spend it on since they are not loaning money to the population. Therefore, this IMO is the canary in the hyper-inflation coal mine. They have too much cash which they know is inflating away.
Instead of the "dollar milkshake theory" which was just a temporary explanation of a short term phenomenon...the dollar surplus is going to go world-wide very soon (remember - all the Petro dollars will soon be coming home to roost!). So quicker than you can blink an eye the dollar will become toxic.
This is the real buttress of Basel III. I think Basel III's real motive is to allow banks to move toward another reserve to pass stress tests in the event of a massive dollar devaluation. Imagine if the dollar's value collapses 30% - now suddenly we don't have a reverse repo problem because they need 30% more dollars to meet reserve requirements - but if the dollar keeps collapsing they want out.
Gold will be the savior because, not only is it real money - but also they can reset the price to any number they need to stabilize the banking system.
That my fellow apes is the endgame. Silver is not part of this game - but it will become the single most sought after wealth protection commodity world-wide among the general population.
We have been here 2 months - if you are not stocked up on physical silver in your OWN possession you are retarded - in a bad way. Train is leaving the station soon folks. Climb aboard the silver express!
EDIT: BTW without doxing myself, I have a PhD in a business related field and taught in some very prestigious business schools. I am now semi-retired. I wanted to make one final point. Now you apes know why the so called intellectuals have been talking MMT. That is just a cover with sexy sounding verbiage to explain what I just detailed above. They printed too much money and don't know what to do with it.
Follow the RRP market over the next week or so to see if the FED has a temporary fix. Nonetheless, it is only a matter of time...
More here:
https://www.reddit.com/r/Wallstreetsilver/com...urce=share
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