How a liquidity crunch in the short-term lending markets sent interest rates soaring. Why this is a huge blunder on the part of the Federal Reserve, and what it means for us as individual investors.
Topics covered in this episode include:
What are repurchase agreements and how are they used to finance U.S Treasuries.How outflows from money market funds and hoarding by banks led to a liquidity crunch that caused repo rates to spike to 10%.Why banks are hoarding reserves held at the central bank even though there are over $1.4 trillion of them, up from $20 billion in 2007.How quantitive easing increases reserves and quantitative tightening reduces reserves.How the Federal Reserve was able to stop the disruption in the repo market, even though the central bank was caught off guard and could have prevented it.How individual investors can protect themselves from unintended consequences arising from the unconventional policies and experiments being conducted by the Federal Reserve and other central banks.Thanks to The Great Courses Plus and LinkedIn for sponsoring the episode.
For show notes and more information on this episode click here.
[0:20] The Fed loses control over policy rates, and repo interest rates soar.[2:19] What is a repurchase agreement (repo)?[5:02] Why the big players in repos pulled back on Sept. 16th.[8:38] Banks need more liquidity because of regulations.[12:53] Why reserves have fallen so low.[17:43] How does the reserve balance get reduced?[19:23] The Fed may have shrunk it’s balance too far.[21:36] What can be done about the reserve shortage?[24:17] What can we learn from the repo rate raise?Should You Hedge Your International Stock Exposure From Currency Fluctuations?
Why Most Cities Thrive and What We Can Learn From Them
Should You Invest in a Bitcoin ETF?
Are Timeshares a Scam? How to Buy and Sell a Timeshare Vacation Rental
Will the U.S. Default? Debt Ceilings, Government Shutdowns, and the National Debt
Why Are There So Many Shortages?
Should You Stop Investing in China? - Evergrande, VIEs and other Chinese Risks
Is a Housing Crash Coming?
How, When, and Why Should You Rebalance Your Investment Portfolio?
Which Money Is Crazier: The U.S. Dollar or Bitcoin?
Now Is the Best Time Ever to Be an Individual Investor
The Pros and Cons of Infinite Banking and Whole Life Insurance
Is This the Key to Wealth, Freedom and Happiness?
How to Profit From Carbon Investing While Combatting Climate Change
How to Invest in Startups on Equity Crowdfunding Platforms
Forward and Reverse Mortgages: When To Take Them Out and When to Pay Them Off
Listener Q&A: Individual stocks, housing bubble, crypto, retirement and more
Should You Invest in Frontier Markets?
Should You Buy an Electric Car or Truck?
Investing In Water
Create your
podcast in
minutes
It is Free
The Commercial Edge: Unleash the Power of People
The emPOWERed Half Hour
U.S Property Podcast
Aligned Money Show
Dubai Property Podcast
The Ramsey Show
The Clark Howard Podcast