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Stansbury Research – Interview with George Gammon
George talks about the Reverse Repo Market and how the Fed is absorbing up to $900 Billion cash in the overnight Repo market.
Reverse Repo drains liquidity from financial assets leading to a disinflationary environment.
The subject is complex, but George condenses and simplifies for neophytes like me.
RR’s drain cash from Reserves at the Fed held by banks, yes.
But banks are using that cash to buy T’s from the Fed. Of their own volition.
They need those T’s to use as collateral so they can make deals with other banks.
Its a problem of the Fed’s own making, since QE involves them buying Ts (and MBS).
What’s so funny George ?
My reaction as well!!