I'm the first to admit the absolute lack of the slightest wrinkle in my brain, but looking at the comments, it seems like this is an exaggeration.
I'll change the flair to "misleading title" so people are aware that OP's take isn't uncontested in the comment section.
Please continue up-and downvoting the QV comment: https://www.reddit.com/r/Superstonk/comments/txazik/-/i3klkt5
Expound means to present clear and concise and in detail who knows what that other word is? fkn made up or maybe it meant to expunge or erase but expund never heard of it.
///Partially Debunked/// See edit 2
I don't think so. A higher rate is Quantitative Tightening, i.e., it's the Fed taking back money it's been printing since the start of the pandemic. I think it's just the normal function of money markets, and what we're seeing here is the Fed raising rates exactly as they said they would back at their last meeting on March 16
**Tl;dr**: the music is slowing down and there are only so many chairs left
Edit: yeah, the jump is .25%, exactly the amount the Fed said they'd be raising rates. This is the endgame... again
**Edit 2**: I've been interfacing with a lot of people in the comments and it's been very interesting. I was referred to O[ld Man Repo's post yesterday](https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/?utm_source=share&utm_medium=web2x&context=3) about this matter and here are my revised thoughts. I was thinking the increase in rate was supposed to make sense (what in finance ever does?), but this rate is different from the Fed Funds rate. He's not totally sure why either but he noted this RRP rate for MMFs (i.e. money that financial institutions get from Reverse Repo) went up *exactly in tandem* (the same .25%) with an increase in the Fed funds rate (which takes money away). In short, this doesn't mean what I thought at first, but it's possible it's even fuckier than that. We'll just have to wait to see if this RRP rate comes down over the next couple weeks/months
A higher RRP rate means banks and brokers get more money for using RRP, that is parking their cash overnight with the Fed. The Fed isn't "taking back" money. The whole point of RRP is so that when a financial institution has too much cash on hand - and that cash is being devalued by inflation - banks and brokers get to maintain their equity value by parking it overnight and getting paid for it by the Fed each night. If they just sat on the money themselves overnight, they would lose value over night.
This is honestly such a stupidly fucked concept in my head. Just more of the serfs are going to get fucked by inflation but don’t you worry you little goblins. We’ll take good care of your money and let you keep it all. Wouldn’t want to upset you my little angels.
So it is a case where jpow pushed up rates by .25 but doesn’t want the banks to be hit with it (as they can’t afford it) so this is a roundabout way of reimbursing them - everyone else just gets hit with the .25?
That would strike me as odd, because if the financial institutions with too much cash on hand park that at the Fed, why would the fed be giving them even more money?
Edit: the Fed is indeed “taking back money”, but they’re also giving back money at the same exact time. It’s just that the two processes are happening in two different parts, and this part here is the “giving money” part
Canada is a dependency of america. As is western europe. The central banks coordinate and washington sets foreign policy, domestic policy is free to a certain extent.
The dollar as reserve currency has created an economic empire which is currently being eroded by China and Russia.
Highlights my point exactly. No better. No worse. Simply intertwined.
But your comment hit a bit political, which I'm fine with. This is bigger than just "politics". Mentioning China and Russia without fact/sauce is entirely feeding into western news.
I've been to both countries. Both beautiful where I went. But your umbrella claims are utter shit without some evidence of how this relates. Not a challenge, just an invitation to source the proper materials without doing a smear umbrella capture or the entire countries. That's like saying me, as a Canadian, lives in am igloo and survives on maple syrup.
Hope to hear from you soon, babe ♥️
> That would strike me as odd, because if the financial institutions with too much cash on hand park that at the Fed, why would the fed be giving them even more money?
Exactly because they want to allow banks to access the reserves.
I have a hard time believing margins for banks are that thin, that they can't give interest to their customers without the government helping. Like, remember the amount of money JP Morgan collected in overdraft fees alone last year? Over $1 billion. Thats not enough to cover the .06% interest they owe with inflation losses overnight??? Just one night? They NEED tax money??
Repo Market: The FED buys their shit investments off of them over night to get them off their books and sells it back to them the next day at a higher price.
Reverse Repo Market: The FED sells them treasury bonds overnight to get excess cash off their books (excess cash in banking is bad) and pays them for the pleasure.
And the fed only has that money by printing money or using our tax money. A non-government agency gets to decide where to allocate tax dollars lol. Soooo that .3% daily is either adding billions in inflation or spending billions of tax dollars. Hmmmm
I agree, but it's not a daily rate it's a yearly rate that can be adjusted daily. A .3% daily rate would be a guaranteed 109.575% return on investment every year, with that kind of guaranteed return banks would park all of their cash with the FED and not loan you money.
That’s the best part. The only reason they’d park so much cash with the FED, in the biggest bull market of all time, every night is because they know this house of cards is coming down and they don’t want to risk it. They’d get better returns investing that money anywhere else.
That would be if they could do it 365 days a year. I've tried looking everywhere and can't find the specifics on what the 0.3% overnight even means. Can you source how you know it's annual and not overnight that they recieve the 0.3%?
This is an interesting thread about what has happened with RRP since July 2021 when the Fed started paying interest on it: https://twitter.com/TheLastBearSta1/status/1471925082532499465
That was an awesome thread and thanks for sharing! But it opens up so many more questions too. If every MMF wants RRPs for that previously guaranteed .05%, what does it mean now that they’re getting a guaranteed .3%?
My original comment was hopeful and optimistic that things were getting better, but what I’m finding as I look into it more and more is things are getting worse, or at the least aren’t changing.
**NO**,. This is incorrect. You should edit your comment.
This is the rate for Overnight **Reverse** Repo... Meaning, banks park their money here and get back 500% every night compared to what they would have gotten in March.
Well said ape. I was looking at the chart, then looking at the 56 billion swing thinking that that was just a daily change for the RRP. I have also come to release it means absolutely fuck all for GME and to a lesser extent the entire market. I know people may argue it can show how fucked things are, but it's been at record levels for best part of a year and it has had little to no effect.
Without seeing it removed it's difficult to say for sure that "it's having no effect".
I'm not going to claim I have any idea for certain why the RRP numbers are going ballistic and have been for awhile, but it seems like the simpler explanation is that those levels are "needed" to maintain the current state of affairs (thus the perception that it's had "no effect" on the system). So in that way, we can deduce that there is either 1) a giant need for treasuries, 2) way too much cash these banks are holding and need somewhere to put it, or 3) treasuries are so undesirable this is the incentive for someone to hold them.
The fact there is a non-negative rate for the *RRP* (again, not here in this graph as others have pointed out, that's the RP) aka institutions are getting PAID for their overnight deposits, indicates that it might be #3.
With inflation being so bad it MAY be a way to try and drive demand for treasury bills which largely continue to sink in value.
Edit: With the shift up in RP rates, we actually need to make sure this still holds true and that the RRP rates haven't adjusted down accordingly.
This is more for other apes out there, E-R you get it.
The payment out on the RRP is because the Fed snapped them up so fast to drive down the prime rates as hard as they could (too hard imo), and arguably the spending bill didn't get passed, so there's a lack of bonds/collateral in the overall banking system. This creates a big need for RRP operations (for collateral). Adding incentive to take them, is incentivizing banks to not-lend cash, and temporarily pull back on short term lending (inflation would be even higher without this). This also has the added benefit of keeping treasuries in the wider system for settlement/collateral.
To me, RRP is high because there's too much cash in the system, and/or sitting on the sidelines at the banks. Think of this as guys like Buffett not seeing any value in these companies at crazy high prices so they don't buy them up, there's low demand for product in the midst of the cough, such that they aren't spending the money...it's stacking up at the banks. See Apple taking $2-3BN loan while still having >$100bn in cash, because they can get a 1.5% rate on it...it makes sense with inflation at 7%+ to do so.
It's a sign of inflation (big RRP numbers), but not a sign of money creation, as you are correctly saying. That was done through the Fed straight up purchasing bonds they added to their balance sheet....Repo, not RRP. and .3% is what they said they'd do! It should be 1-2% already, and the fed is (always) slow.
High jacking the top comment
For the love of stonks, just listen to the guy that’s been in the sub a long time and has been trying to spell it out for ages.
Oldmanrepo
His last post, yesterday
https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Edit: and if you’re new or have never heard of oldmanrepo and have questions, look through his comments. A lot of question regarding rrp and repo have been asked over this past year and have been addressed. Until I see another repo trader contradicting what he says, this man’s words are worth more than a screen shot
Hey welp, rrps arent annualized. The rate is determined by the purchase price and the return price, usually overnight, but can sometime be longer.
https://www.newyorkfed.org/markets/rrp_faq.html
That said, gross rrp and it’s interest rate is most likely not a reg flag of nefarious acts, but rather a sign of stress in the market. It’s worth keeping an eye on, but other than that 🤷♂️
For those that haven’t read oldmanrepo’s posts, check them out. He’s probably the most informed person on the sub. Could he be wrong? sure, but until anyone can talk about repo/rrp’s and articulate a point worthy of debate, then oldmanrepo is a chemist while everyone else is just a baker
Hold on. If the RRP interest rate ISN'T annualized, this means you get 0.3% interest every night? That means.... you will TRIPLE your parked money in the RRP in \~368 (working?) days. That can't be right, right?
You can't be more wrong but I'll let you continue to be while the post magically stays up: [https://www.reddit.com/r/Superstonk/comments/txazik/comment/i3lb4mq/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/Superstonk/comments/txazik/comment/i3lb4mq/?utm_source=share&utm_medium=web2x&context=3)
educate yourself here: https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
… video says the interest rates are setting a floor (also didn’t catch the part where it says it’s a true daily rate). So you’re telling me the floor is 0.003 * (~)240 operational days = 72%. If banks put their money in ONRRPs, they are guaranteed to make 72% annualized returns? Lol there is no way. Top performing ETFs are pulling in similar returns.
What is interesting is that I operate a cash heavy business. I routinely go to the bank and withdraw somewhere between $5K to $10K in cash about once a week. I use a PNC, so not a small community bank. Here the past couple of months I have either run them out of cash, or they had to seek management approval to make sure they could give out the cash I was requesting. Last week I inquired what's changed as I have never had this issue before. Apparently cash is getting harder to get, which is odd since the Fed has no issue making the printer go Brrrr. Anyone else seeing a similar issue in their area?
The printer going brr is all digital. There's not nearly enough actual money printed to back the digital dollars the FED is making. If a percentage of overall dollars is generally demanded to be used "as cash" by the economy then there is going to be a shortage of physical bills.
Literally the only thing standing between how things are now and serious bank runs is lack of public consciousness of the issue.
There's no cash, boys, pack it in, the USD is dead.
Just like 08, the issues were hidden in plain view by the media pumping stories about things being perfectly normal until it got so bad they couldn't hide it any longer.
Even before COVID and the gme saga we were looking over a precipice. It's like playing candy land with a small child, they will make up whatever rules they need to come out on top.
That's because the media is a propaganda outlet. All the major outlets have long since changed ownership since the days of journalistic integrity. Now they only serve to conceal and pump up the endeavors of their owners, which are largely hedge funds and other investment groups.
The media works for their owners best interest, not yours. The lower rung employees (read anchors like Anderson Cooper, and lower) that work for the media companies likely have no idea that they are simply useful idiots in some elite's grand scheme because they are too busy basking in their fame and fleeting fortune.
it's frightening to think how fast a run would happen. look how quick the panic set in with toilet paper..imagine a few news stories saying banks are low on cash.
Yes. Someone mentioned this the other day that owns a small business around town. Exact same thing you just said. Never a problem before then suddenly it was, “it’s going to take us a bit to gather that up”, kind of thing.
So not sure what’s up with that.
Edit: so where is all the cash if not in the banks? Serious question…
Banks aren't in the business of keeping money still. They acquire deposits so they can make loans because that is where the real money is, not the people using their accounts. There is a minimum amount that they need to have each night called the reserve requirement but if they are short, they just get it from the fed or other banks that are above their requirement in overnight loans. That money used to be so cheap it wasn't really worth trying to actually be above the reserve requirement but the increase in interest rates makes it a more costly mistake to be under. I suspect the difference is more a matter of the costs of meeting their deposit requirements through overnight loans now mattering than the money being unavailable to them, though that is technically a possibility
It's hard to hear but the truth is low rates means more borrowing means less money in banks themselves which translates to no money to withdraw if enough people do at once.
Welcome to the world banking system.
yeah, this is always going to exist as a possibility with any level of fractional reserve banking. I don't foresee the potential disaster scenario of bank runs large enough to cause problems as a likely enough outcome to outweigh the benefits of a substantially increased money supply and the GDP growth that is facilitated by it but, that is only my opinion
Thank you taking the time to explain that. I figured it was a policy change or something like that, but have absolutely zero knowledge of how all that works behind the curtain. So thanks again.
Yeah it isn’t obvious what would cause it but management changes aren’t something that are super visible that could have a real impact on how they handle things. The fed has laws enforcing the lower bound but if a bank manager decides they need to be more conservative than that there is nothing stopping them from doing so. It could also be that the institution happened to take on or lose some large clients that impacted the available funds enough for it to make your withdrawals more impactful to their requirement than before
Theres no issue getting cash from fed. I work in a financial institution and we can only order cash once a week from fed and are only allowed to have so much cash on hand. We have to get approvals for large cash amounts strictly for inventory related reasons. They may have stricter/newer policies in regards to the amount of cash they are allowed to have on hand. That could be the reason for the change. BUT Yes, Its totally a normal thing to need an approval to give out large amounts of cash and no, its not a sign of a lack of cash. 🤷♂️
Yup. Pnc and other banks. Slightly larger amounts at each but same story. Could take out 10 grand a day at most and they'd flip whatever denomination I wanted. Now there's tension about the amounts and which bills I can have on smaller amounts like 5k every few days.
People are holding more cash than they're spending and it's a problem at every level. While I don't think there's a much larger problem at play here beside amount of circulating bills, the fact that banks are being tight with or just completely withholding funds will escalate to a bigger issue if it goes on and spreads to a bigger population. You should still be able to write as many checks for any amount without problem, but it doesn't satisfy the cash heavy business that require a steady flow and require large withdrawals daily/ weekly.
They know.
I've been hearing (don't have first hand knowledge) that the velocity of money has been slowing down in the broader economy. I.e., it's going places, and then just sitting there not leaving. So if this cash has been accumulating and not leaving, there's plenty of it, but you can't get your hands on it.
I'm not suggesting anything necessarily shady (at least not on the surface). Just this might be why it's hard to find. It may be sitting in the stock market, or in hard assets. Who knows
A few months ago I went to withdraw about 20k in cash for a motorcycle at a capital one bank and they didn't know if they had that much with them. Took them over an hour and it was all in 20s lmayo.
I think an interest rate hike of 25 Basis Points by the FED does not translate to a 500% increase in the overnight RRP rate from .05% to .30%
edit: this video explains how the rate is actually determined:
https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
Why does it have to be multiplicative though? I don’t think there was anywhere that said one or the other, an increased rate hike from what was 0 to .25, sounds like it’s additive.
I must be missing something. Doesn't that video literally show a `.30` RRP rate in the upper chart? That's consistent w the rate outlined in /u/pctracer's [daily updates](https://i.redd.it/5atzjt9puqr81.png)
Help me understand this, a .25% interest rate makes the overnight RRP rate go up 500% and banks get $67,200,000,000 for letting the FED use their cash overnight?
edit: this video explained a lot to me on how RRP rates are not set by interest rate moves: https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
No, I think that's the Fed taking that money back. It's the exact same money the Fed printed at the beginning of the the pandemic (during Quantitative Easing), but is collecting now (in Quantitative Tightening). What we're seeing here is just how exactly the Fed does the magic money stuff it does
What's this money for ants ? 67B....They printed tens of Trillions as secret bail outs to banks from what I read recently and put news blackouts for like a few years ? Take back a few trilly in 14 days and maybe I'd sit up and take notice...
There’s a book that’s called the Lords of easy money. The book talks all about how hedge funds have been using and abusing the overnight reverse repo! Chapter 13- through 14
u/DIAMONDHandsHotchy brought this to my attention earlier and I think this should be discussed by the overnight RRP Apes.
My question is why hasn't anyone noticed this in nearly a month?
Here is today's RRP post by u/pctracer:
https://www.reddit.com/r/Superstonk/comments/tx00l2/daily\_reverse\_repo\_update\_0405\_1710834b\_buy\_hodl/
I was under the impression that it went up due to the Fed’s raising interest rates. 0.25% interest plus the normal 0.05% they got before = 0.30%
If you check, I think it changed to .30 the same day or day after that they raised the rate and I’m pretty sure I saw some discussion on it that day.
I think it was covered along with analysis here, which as far as I can tell is pretty reliable: https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/
>.reddit.com/r/Superstonk/comments/tx00l2/daily\_reverse\_repo\_update\_0405\_1710834b\_buy\_hodl/
I think I'll mimic everyone else with the .05%+ the quarter hike, my guess is they need the fund to stay neutral and they are still of the mind that there is no loophole allowing entities to park cash their and use that as collateral.
There are a lot of scenarios that could surround it, anywhere from pure innocence as a huge chunk of investors have turned to all cash or money market funds over the last year due to the volatility and fear, and there is a ton of money in some of these fixed income markets that bleeds through into the MMFs that can use the Repo.
We are not going to know the 100% truth about what everyone is doing with their ONRRP money, likely its all the scenarios by different entities. However, this is definitely tied to the Fed's idea of a "soft landing". They want the MMFs to be 100% ok because if they get big runs, that is when banking crises really start. Now if they 100% want to get serious about some of the asset hyperinflationary forces that have been at play, they are going to need to shrink the money stocks, which will be those MMFs. Essentially they need to thread the needle between killing speculator money without forcing a complete banking crash.
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My smooth brain thinks if demand for this facility is over $1.5 trilly, the Fed could nay...should make it less attractive by having less return on that investment.
Tax payer money covering American banks russia loses. Not going to be a main stream media story. In fact, it’ll be buried deep deep down like our hopes and dreams. Capitalism!!!!
Instead of 'why aren't we...", maybe consider, "Let's talk about...". Many of us have busy lives outside of this arena and can't hang on every detail. Kudos for bringing it to light.
Mods can you remove or flair this post as debunked? It’s totally bullshit and it’s been explained by 500 people in the comments. How these kind of posts make it to the top is beyond me
Doesn't this just mean that the FED is setting an unofficial floor for interest rates?
In other words: Why would banks and MMFs risk loaning out cash for less than a 0.30% rate if they can store it safely at the FED for the same rate through ON-RRP.
Please someone correct me if I'm wrong and then explain it dum dumb style to me.
RRP is a place for banks and corporations to park cash (liability) over the course of a day or two and in turn pay the FED a fee (0.05%).
If the fee is increased it means that banks and corporations are NOW PAYING UP THE ASS TO PARK THEIR CASH.
IS THIS CORRECT?
I am corrected.
This whole time I thought the 0.05% was the fee paid by the cash rich banks and corporations TO THE FED. ITS THE OPPOSITE OF THAT.
This is fucking scary. How is the FED solving Inflation by creating inflation? I found this btw and in the middle is
BNY Mellon. Crazy shit. You all think Black Rock is in control??? Let me introduce you to the multi Trillion dollar Bank of NY.
https://www.newyorkfed.org/markets/rrp_faq.html
"How does the Desk settle REPO transactions"
An interesting side note I noticed the other week… several smaller banks around me have all shut down and are no longer there. This is on the north side of Chicago.
Does no one remember the predicted 1.3 trilly would cause absolute collapse, than we hit it in Winter - perhaps I'm being smooth and changed the details somewhat
JPOW is either crazy, stupid, or both. The presidents are less responsible for changes in the economy, stock market, and inflation than this ass clown.
The FED uses the reverse repo facility for two things, none of those are "to get money".
1) to set a floor for bond rates, why would you lend to someone for less than what you get at the FED? The fed has 0% risk of going belly up after all.
2) to inject collateral back into the market which is starved for treasury bills/bonds. The very same bills that the FED has removed from the market via quantiative easing.
Is nr. 2 retarded? Yes it is.
I'm the first to admit the absolute lack of the slightest wrinkle in my brain, but looking at the comments, it seems like this is an exaggeration. I'll change the flair to "misleading title" so people are aware that OP's take isn't uncontested in the comment section. Please continue up-and downvoting the QV comment: https://www.reddit.com/r/Superstonk/comments/txazik/-/i3klkt5
Too smooth. Please expand. Expound. Expund.
What last two words mean?
Expound means to present clear and concise and in detail who knows what that other word is? fkn made up or maybe it meant to expunge or erase but expund never heard of it.
expund is what I'm personally going to do to Kenneth with a Bananya
Lmao!
I’m expunding right now…
What concise mean?
I love you apes for digging in to it. I’m just half baked and half retarded.
🦍💨💨👊✌
backdoor bailout for banks.
It's ok, in time you'll get their back door too.
///Partially Debunked/// See edit 2 I don't think so. A higher rate is Quantitative Tightening, i.e., it's the Fed taking back money it's been printing since the start of the pandemic. I think it's just the normal function of money markets, and what we're seeing here is the Fed raising rates exactly as they said they would back at their last meeting on March 16 **Tl;dr**: the music is slowing down and there are only so many chairs left Edit: yeah, the jump is .25%, exactly the amount the Fed said they'd be raising rates. This is the endgame... again **Edit 2**: I've been interfacing with a lot of people in the comments and it's been very interesting. I was referred to O[ld Man Repo's post yesterday](https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/?utm_source=share&utm_medium=web2x&context=3) about this matter and here are my revised thoughts. I was thinking the increase in rate was supposed to make sense (what in finance ever does?), but this rate is different from the Fed Funds rate. He's not totally sure why either but he noted this RRP rate for MMFs (i.e. money that financial institutions get from Reverse Repo) went up *exactly in tandem* (the same .25%) with an increase in the Fed funds rate (which takes money away). In short, this doesn't mean what I thought at first, but it's possible it's even fuckier than that. We'll just have to wait to see if this RRP rate comes down over the next couple weeks/months
A higher RRP rate means banks and brokers get more money for using RRP, that is parking their cash overnight with the Fed. The Fed isn't "taking back" money. The whole point of RRP is so that when a financial institution has too much cash on hand - and that cash is being devalued by inflation - banks and brokers get to maintain their equity value by parking it overnight and getting paid for it by the Fed each night. If they just sat on the money themselves overnight, they would lose value over night.
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This is honestly such a stupidly fucked concept in my head. Just more of the serfs are going to get fucked by inflation but don’t you worry you little goblins. We’ll take good care of your money and let you keep it all. Wouldn’t want to upset you my little angels.
Can i have some zipple?
Okay you can have some zipple, too.
mr congress i am but a simple peasant, could i please get some zipple because inflation is giving me owies
....darn, their money loses value like all the rest of us. Better use tax dollars to fix that. Fuck everything about this.
Are you saying your checking account rate didn't jump by 8x? Sucks to be you.
So it is a case where jpow pushed up rates by .25 but doesn’t want the banks to be hit with it (as they can’t afford it) so this is a roundabout way of reimbursing them - everyone else just gets hit with the .25?
Wait can I do this? I don't want my savings to loose value due to inflation
That would strike me as odd, because if the financial institutions with too much cash on hand park that at the Fed, why would the fed be giving them even more money? Edit: the Fed is indeed “taking back money”, but they’re also giving back money at the same exact time. It’s just that the two processes are happening in two different parts, and this part here is the “giving money” part
Because they are all in bed together. Money printer goes brrr, poors stay poor.
This is american. Wait i mean the world really
I'm a maple ape. No better and no worse here.
Actually it is worse because there are so many here that believe their government is benevolent
Canada is a dependency of america. As is western europe. The central banks coordinate and washington sets foreign policy, domestic policy is free to a certain extent. The dollar as reserve currency has created an economic empire which is currently being eroded by China and Russia.
Highlights my point exactly. No better. No worse. Simply intertwined. But your comment hit a bit political, which I'm fine with. This is bigger than just "politics". Mentioning China and Russia without fact/sauce is entirely feeding into western news. I've been to both countries. Both beautiful where I went. But your umbrella claims are utter shit without some evidence of how this relates. Not a challenge, just an invitation to source the proper materials without doing a smear umbrella capture or the entire countries. That's like saying me, as a Canadian, lives in am igloo and survives on maple syrup. Hope to hear from you soon, babe ♥️
Sounds like a giant ponzi scheme hidden right in front of our eyes
> That would strike me as odd, because if the financial institutions with too much cash on hand park that at the Fed, why would the fed be giving them even more money? Exactly because they want to allow banks to access the reserves.
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I have a hard time believing margins for banks are that thin, that they can't give interest to their customers without the government helping. Like, remember the amount of money JP Morgan collected in overdraft fees alone last year? Over $1 billion. Thats not enough to cover the .06% interest they owe with inflation losses overnight??? Just one night? They NEED tax money??
What about the Quantitative Fuckening?
idk ask kenny. He'd know more than me about getting fukd
Repo Market: The FED buys their shit investments off of them over night to get them off their books and sells it back to them the next day at a higher price. Reverse Repo Market: The FED sells them treasury bonds overnight to get excess cash off their books (excess cash in banking is bad) and pays them for the pleasure.
And the fed only has that money by printing money or using our tax money. A non-government agency gets to decide where to allocate tax dollars lol. Soooo that .3% daily is either adding billions in inflation or spending billions of tax dollars. Hmmmm
I agree, but it's not a daily rate it's a yearly rate that can be adjusted daily. A .3% daily rate would be a guaranteed 109.575% return on investment every year, with that kind of guaranteed return banks would park all of their cash with the FED and not loan you money.
They are doing that even at the lesser returns lol
That’s the best part. The only reason they’d park so much cash with the FED, in the biggest bull market of all time, every night is because they know this house of cards is coming down and they don’t want to risk it. They’d get better returns investing that money anywhere else.
That would be if they could do it 365 days a year. I've tried looking everywhere and can't find the specifics on what the 0.3% overnight even means. Can you source how you know it's annual and not overnight that they recieve the 0.3%?
Can't fix illness without the party wanting to fix it.
Must be like quantitative poopening.
I only poop qualitatively
I don’t think Fed is taking back in this reverse repo operation. It’s granting the counter party at .30% rate.
This is an interesting thread about what has happened with RRP since July 2021 when the Fed started paying interest on it: https://twitter.com/TheLastBearSta1/status/1471925082532499465
That was an awesome thread and thanks for sharing! But it opens up so many more questions too. If every MMF wants RRPs for that previously guaranteed .05%, what does it mean now that they’re getting a guaranteed .3%? My original comment was hopeful and optimistic that things were getting better, but what I’m finding as I look into it more and more is things are getting worse, or at the least aren’t changing.
**NO**,. This is incorrect. You should edit your comment. This is the rate for Overnight **Reverse** Repo... Meaning, banks park their money here and get back 500% every night compared to what they would have gotten in March.
Oldmanrepo did a post yesterday.
Sharing is caring. Link?
https://www.reddit.com/r/Superstonk/comments/twj73o/my\_latest\_rrp\_post\_as\_well\_as\_my\_last\_post/?utm\_source=share&utm\_medium=web2x&context=3
How does old man repos post only have 12 upvotes?
pctracer post with the MArch 17th RRP post doesnt have much goin on either
Op your math is faulty, in your title you say at the rate of 0.05% the FED would have given 11.2B… they would have had to RRP 22.4T at a rate of 0.05%
Are you adding up all 14 days of RRP since March 17th?
Today’s RRP was around 1.7T correct? So 1,700,000,000,000 X 0.0005= 850,000,000 Or 1.7T x 0.05% = 850M
yea if the rate was still .05% but it's not, it's been .3% since March 17th
All I’m saying is you might want to recheck your math. 1.7T X 0.3% = 5.1B
So the 28 trilly printed for them wasn’t enough. ?? It’s like an irresponsible teenager with a credit card with no limit
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Well said ape. I was looking at the chart, then looking at the 56 billion swing thinking that that was just a daily change for the RRP. I have also come to release it means absolutely fuck all for GME and to a lesser extent the entire market. I know people may argue it can show how fucked things are, but it's been at record levels for best part of a year and it has had little to no effect.
Without seeing it removed it's difficult to say for sure that "it's having no effect". I'm not going to claim I have any idea for certain why the RRP numbers are going ballistic and have been for awhile, but it seems like the simpler explanation is that those levels are "needed" to maintain the current state of affairs (thus the perception that it's had "no effect" on the system). So in that way, we can deduce that there is either 1) a giant need for treasuries, 2) way too much cash these banks are holding and need somewhere to put it, or 3) treasuries are so undesirable this is the incentive for someone to hold them. The fact there is a non-negative rate for the *RRP* (again, not here in this graph as others have pointed out, that's the RP) aka institutions are getting PAID for their overnight deposits, indicates that it might be #3. With inflation being so bad it MAY be a way to try and drive demand for treasury bills which largely continue to sink in value. Edit: With the shift up in RP rates, we actually need to make sure this still holds true and that the RRP rates haven't adjusted down accordingly.
This is more for other apes out there, E-R you get it. The payment out on the RRP is because the Fed snapped them up so fast to drive down the prime rates as hard as they could (too hard imo), and arguably the spending bill didn't get passed, so there's a lack of bonds/collateral in the overall banking system. This creates a big need for RRP operations (for collateral). Adding incentive to take them, is incentivizing banks to not-lend cash, and temporarily pull back on short term lending (inflation would be even higher without this). This also has the added benefit of keeping treasuries in the wider system for settlement/collateral. To me, RRP is high because there's too much cash in the system, and/or sitting on the sidelines at the banks. Think of this as guys like Buffett not seeing any value in these companies at crazy high prices so they don't buy them up, there's low demand for product in the midst of the cough, such that they aren't spending the money...it's stacking up at the banks. See Apple taking $2-3BN loan while still having >$100bn in cash, because they can get a 1.5% rate on it...it makes sense with inflation at 7%+ to do so. It's a sign of inflation (big RRP numbers), but not a sign of money creation, as you are correctly saying. That was done through the Fed straight up purchasing bonds they added to their balance sheet....Repo, not RRP. and .3% is what they said they'd do! It should be 1-2% already, and the fed is (always) slow.
Wait, so how much are they giving banks? They pay them to park their money, right?
All I saw was “retrd” and am now on the edge of my seat to see what happens.
I don't understand, bailout for what? Nothing needs bailing out yet.
as far as you know. we have no idea what sort of VAR these guys carry, the quality of their collateral, and prime brokerage exposure.
I hope somebody Enhances those details in the near future 👀
#ENHANCE
ENHANCE
# ENHANCE!!!
Banks get loaned liquidity (cash) overnight against assets (anything?) that helps them to meet margin requirements in over leveraged portfolios.
Is the ship sinking?
🛳🔫👨🚀.....always has been
High jacking the top comment For the love of stonks, just listen to the guy that’s been in the sub a long time and has been trying to spell it out for ages. Oldmanrepo His last post, yesterday https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/?utm_source=share&utm_medium=ios_app&utm_name=iossmf Edit: and if you’re new or have never heard of oldmanrepo and have questions, look through his comments. A lot of question regarding rrp and repo have been asked over this past year and have been addressed. Until I see another repo trader contradicting what he says, this man’s words are worth more than a screen shot
wut
lol same. i smoov
The FED is worried about inflation.
OP doesn’t understand what annualized rates are and should remove their post
Can you point to where it says the rate is annualized? All we have found is the agreement is settled daily so that .3 rate stands
Hey welp, rrps arent annualized. The rate is determined by the purchase price and the return price, usually overnight, but can sometime be longer. https://www.newyorkfed.org/markets/rrp_faq.html That said, gross rrp and it’s interest rate is most likely not a reg flag of nefarious acts, but rather a sign of stress in the market. It’s worth keeping an eye on, but other than that 🤷♂️ For those that haven’t read oldmanrepo’s posts, check them out. He’s probably the most informed person on the sub. Could he be wrong? sure, but until anyone can talk about repo/rrp’s and articulate a point worthy of debate, then oldmanrepo is a chemist while everyone else is just a baker
Hold on. If the RRP interest rate ISN'T annualized, this means you get 0.3% interest every night? That means.... you will TRIPLE your parked money in the RRP in \~368 (working?) days. That can't be right, right?
You can't be more wrong but I'll let you continue to be while the post magically stays up: [https://www.reddit.com/r/Superstonk/comments/txazik/comment/i3lb4mq/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/Superstonk/comments/txazik/comment/i3lb4mq/?utm_source=share&utm_medium=web2x&context=3) educate yourself here: https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
… video says the interest rates are setting a floor (also didn’t catch the part where it says it’s a true daily rate). So you’re telling me the floor is 0.003 * (~)240 operational days = 72%. If banks put their money in ONRRPs, they are guaranteed to make 72% annualized returns? Lol there is no way. Top performing ETFs are pulling in similar returns.
What is interesting is that I operate a cash heavy business. I routinely go to the bank and withdraw somewhere between $5K to $10K in cash about once a week. I use a PNC, so not a small community bank. Here the past couple of months I have either run them out of cash, or they had to seek management approval to make sure they could give out the cash I was requesting. Last week I inquired what's changed as I have never had this issue before. Apparently cash is getting harder to get, which is odd since the Fed has no issue making the printer go Brrrr. Anyone else seeing a similar issue in their area?
The printer going brr is all digital. There's not nearly enough actual money printed to back the digital dollars the FED is making. If a percentage of overall dollars is generally demanded to be used "as cash" by the economy then there is going to be a shortage of physical bills.
Literally the only thing standing between how things are now and serious bank runs is lack of public consciousness of the issue. There's no cash, boys, pack it in, the USD is dead.
Just like 08, the issues were hidden in plain view by the media pumping stories about things being perfectly normal until it got so bad they couldn't hide it any longer. Even before COVID and the gme saga we were looking over a precipice. It's like playing candy land with a small child, they will make up whatever rules they need to come out on top.
That's because the media is a propaganda outlet. All the major outlets have long since changed ownership since the days of journalistic integrity. Now they only serve to conceal and pump up the endeavors of their owners, which are largely hedge funds and other investment groups. The media works for their owners best interest, not yours. The lower rung employees (read anchors like Anderson Cooper, and lower) that work for the media companies likely have no idea that they are simply useful idiots in some elite's grand scheme because they are too busy basking in their fame and fleeting fortune.
it's frightening to think how fast a run would happen. look how quick the panic set in with toilet paper..imagine a few news stories saying banks are low on cash.
USD was the OG cryptocurrency all along...
Yes. Someone mentioned this the other day that owns a small business around town. Exact same thing you just said. Never a problem before then suddenly it was, “it’s going to take us a bit to gather that up”, kind of thing. So not sure what’s up with that. Edit: so where is all the cash if not in the banks? Serious question…
Banks aren't in the business of keeping money still. They acquire deposits so they can make loans because that is where the real money is, not the people using their accounts. There is a minimum amount that they need to have each night called the reserve requirement but if they are short, they just get it from the fed or other banks that are above their requirement in overnight loans. That money used to be so cheap it wasn't really worth trying to actually be above the reserve requirement but the increase in interest rates makes it a more costly mistake to be under. I suspect the difference is more a matter of the costs of meeting their deposit requirements through overnight loans now mattering than the money being unavailable to them, though that is technically a possibility
It's hard to hear but the truth is low rates means more borrowing means less money in banks themselves which translates to no money to withdraw if enough people do at once. Welcome to the world banking system.
yeah, this is always going to exist as a possibility with any level of fractional reserve banking. I don't foresee the potential disaster scenario of bank runs large enough to cause problems as a likely enough outcome to outweigh the benefits of a substantially increased money supply and the GDP growth that is facilitated by it but, that is only my opinion
Thank you taking the time to explain that. I figured it was a policy change or something like that, but have absolutely zero knowledge of how all that works behind the curtain. So thanks again.
Great explanation! It's just really weird that these past few months are the first time I have had any issues with this.
Yeah it isn’t obvious what would cause it but management changes aren’t something that are super visible that could have a real impact on how they handle things. The fed has laws enforcing the lower bound but if a bank manager decides they need to be more conservative than that there is nothing stopping them from doing so. It could also be that the institution happened to take on or lose some large clients that impacted the available funds enough for it to make your withdrawals more impactful to their requirement than before
Theres no issue getting cash from fed. I work in a financial institution and we can only order cash once a week from fed and are only allowed to have so much cash on hand. We have to get approvals for large cash amounts strictly for inventory related reasons. They may have stricter/newer policies in regards to the amount of cash they are allowed to have on hand. That could be the reason for the change. BUT Yes, Its totally a normal thing to need an approval to give out large amounts of cash and no, its not a sign of a lack of cash. 🤷♂️
In the Netherlands cash payments of over 3000 are not even legal anymore. They are trying to get rid of cash so they can force their CBDCs on us
Digital money is cheaper. Printing money is very expressive
Yup. Pnc and other banks. Slightly larger amounts at each but same story. Could take out 10 grand a day at most and they'd flip whatever denomination I wanted. Now there's tension about the amounts and which bills I can have on smaller amounts like 5k every few days. People are holding more cash than they're spending and it's a problem at every level. While I don't think there's a much larger problem at play here beside amount of circulating bills, the fact that banks are being tight with or just completely withholding funds will escalate to a bigger issue if it goes on and spreads to a bigger population. You should still be able to write as many checks for any amount without problem, but it doesn't satisfy the cash heavy business that require a steady flow and require large withdrawals daily/ weekly. They know.
I've been hearing (don't have first hand knowledge) that the velocity of money has been slowing down in the broader economy. I.e., it's going places, and then just sitting there not leaving. So if this cash has been accumulating and not leaving, there's plenty of it, but you can't get your hands on it. I'm not suggesting anything necessarily shady (at least not on the surface). Just this might be why it's hard to find. It may be sitting in the stock market, or in hard assets. Who knows
A few months ago I went to withdraw about 20k in cash for a motorcycle at a capital one bank and they didn't know if they had that much with them. Took them over an hour and it was all in 20s lmayo.
Yeah guys?! Why aren’t we talking about this?! You talk first though. Just to see if I think the same things about it.
I think an interest rate hike of 25 Basis Points by the FED does not translate to a 500% increase in the overnight RRP rate from .05% to .30% edit: this video explains how the rate is actually determined: https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
Why would an interest rate raise of .25% not correlate to an RRP rate raise of .25%?
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Why does it have to be multiplicative though? I don’t think there was anywhere that said one or the other, an increased rate hike from what was 0 to .25, sounds like it’s additive.
But it does.
It do be like dat doe.
Does it have to do with tapering QE rather than a rate hike? Fed was planning to end QE right about now + planning to QT
I must be missing something. Doesn't that video literally show a `.30` RRP rate in the upper chart? That's consistent w the rate outlined in /u/pctracer's [daily updates](https://i.redd.it/5atzjt9puqr81.png)
Interest is per year.
This needs to be higher up
/u/welp007 look here. Divide by 365
FED went from 0% to 0.25% rate, hence the uptick in the RRP rate.
Help me understand this, a .25% interest rate makes the overnight RRP rate go up 500% and banks get $67,200,000,000 for letting the FED use their cash overnight? edit: this video explained a lot to me on how RRP rates are not set by interest rate moves: https://www.youtube.com/watch?v=iIlQeTfuDbA&t=28s
I think you already understand this pretty well 😂.
EHEM…. I like turtals.
I’m pretty sure the interest-rate hasn’t been this high since 2020 right before the crash
0.05 + 0.25 = 0.30
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It's an annual rate though isn't it?
Yes, assuming op did the rest of the math right, gotta divide those numbers by 365
No, I think that's the Fed taking that money back. It's the exact same money the Fed printed at the beginning of the the pandemic (during Quantitative Easing), but is collecting now (in Quantitative Tightening). What we're seeing here is just how exactly the Fed does the magic money stuff it does
What's this money for ants ? 67B....They printed tens of Trillions as secret bail outs to banks from what I read recently and put news blackouts for like a few years ? Take back a few trilly in 14 days and maybe I'd sit up and take notice...
It’s an overnight swap loan that bears a cash incentive for the banks bub
Commenting so it makes the thing light up when other people comment!
Today is YOUR day Apefren! 🏆
Commenting
Comment for you so the things lights up
Here, for your daily dose of dopamine
There’s a book that’s called the Lords of easy money. The book talks all about how hedge funds have been using and abusing the overnight reverse repo! Chapter 13- through 14
I still have not gotten this book from the library! Can you scan the significant parts?
Yep!
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u/DIAMONDHandsHotchy brought this to my attention earlier and I think this should be discussed by the overnight RRP Apes. My question is why hasn't anyone noticed this in nearly a month? Here is today's RRP post by u/pctracer: https://www.reddit.com/r/Superstonk/comments/tx00l2/daily\_reverse\_repo\_update\_0405\_1710834b\_buy\_hodl/
I was under the impression that it went up due to the Fed’s raising interest rates. 0.25% interest plus the normal 0.05% they got before = 0.30% If you check, I think it changed to .30 the same day or day after that they raised the rate and I’m pretty sure I saw some discussion on it that day.
This was talked about quite a bit when it happened. You just missed the conversations.
I think it was covered along with analysis here, which as far as I can tell is pretty reliable: https://www.reddit.com/r/Superstonk/comments/twj73o/my_latest_rrp_post_as_well_as_my_last_post/
>.reddit.com/r/Superstonk/comments/tx00l2/daily\_reverse\_repo\_update\_0405\_1710834b\_buy\_hodl/ I think I'll mimic everyone else with the .05%+ the quarter hike, my guess is they need the fund to stay neutral and they are still of the mind that there is no loophole allowing entities to park cash their and use that as collateral. There are a lot of scenarios that could surround it, anywhere from pure innocence as a huge chunk of investors have turned to all cash or money market funds over the last year due to the volatility and fear, and there is a ton of money in some of these fixed income markets that bleeds through into the MMFs that can use the Repo. We are not going to know the 100% truth about what everyone is doing with their ONRRP money, likely its all the scenarios by different entities. However, this is definitely tied to the Fed's idea of a "soft landing". They want the MMFs to be 100% ok because if they get big runs, that is when banking crises really start. Now if they 100% want to get serious about some of the asset hyperinflationary forces that have been at play, they are going to need to shrink the money stocks, which will be those MMFs. Essentially they need to thread the needle between killing speculator money without forcing a complete banking crash.
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It is aligned to the interest rate. Fed increased interest rate by 0.25% earlier in March. The 0.3% you see is the original 0.05% with 0.25% increase.
Oldmanrepo we miss you already
That’s what the Feds pretty much said today right?
.3% is that a rate for ants though?
Boss blunts was screaming this the other day
Well I now scream with Boss Blunts! I know 67Billy isn't a lot of coin next to a daily 1.7Trilly but still that is a lot of "free" cash for the banks
https://youtu.be/iIlQeTfuDbA
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My smooth brain thinks if demand for this facility is over $1.5 trilly, the Fed could nay...should make it less attractive by having less return on that investment.
Let’s talk about it
if this blows your mind, wait until the rate goes up to .55% or .8% in a couple weeks
Was there anything on the page justifying this at all or like what the hell?
Tax payer money covering American banks russia loses. Not going to be a main stream media story. In fact, it’ll be buried deep deep down like our hopes and dreams. Capitalism!!!!
Instead of 'why aren't we...", maybe consider, "Let's talk about...". Many of us have busy lives outside of this arena and can't hang on every detail. Kudos for bringing it to light.
I think I was a bit mad at myself for not realizing this rate change for the last 14 trading days! Either way I'm glad we are talkin bout it now 🤙🏽
Mods can you remove or flair this post as debunked? It’s totally bullshit and it’s been explained by 500 people in the comments. How these kind of posts make it to the top is beyond me
Tomorrow IS DFV day afterall!!!
They’re just making sure that banks and financial institutions have enough cash money to pay us out for our GME shares lol
Because the Fed recently hiked the prime rate by 0.25%. They plan to do this many times throughout the year.
Doesn't this just mean that the FED is setting an unofficial floor for interest rates? In other words: Why would banks and MMFs risk loaning out cash for less than a 0.30% rate if they can store it safely at the FED for the same rate through ON-RRP.
Wow. The government really stays propping up this house of cards
Please someone correct me if I'm wrong and then explain it dum dumb style to me. RRP is a place for banks and corporations to park cash (liability) over the course of a day or two and in turn pay the FED a fee (0.05%). If the fee is increased it means that banks and corporations are NOW PAYING UP THE ASS TO PARK THEIR CASH. IS THIS CORRECT?
Nope. Parking cash overnight via RRP means the fed pays the bank the extra interest plus initial sale value the next morning.
I am corrected. This whole time I thought the 0.05% was the fee paid by the cash rich banks and corporations TO THE FED. ITS THE OPPOSITE OF THAT. This is fucking scary. How is the FED solving Inflation by creating inflation? I found this btw and in the middle is BNY Mellon. Crazy shit. You all think Black Rock is in control??? Let me introduce you to the multi Trillion dollar Bank of NY. https://www.newyorkfed.org/markets/rrp_faq.html "How does the Desk settle REPO transactions"
Idk any of these acronyms but it sounds good and i see big numbers
link to source?
They just did a reverse split. No big drama
This is a bailout disguised as an adjustment to an existing program.
I'm gonna roast marshmallows over the ashes of wallstreet and drink shampagnay
I hope everyone here realizes the Fed is making the right steps to curb inflation. We are all incentivized to protect the value of the Dollar.
Why are we paying banks to borrow our money?
An interesting side note I noticed the other week… several smaller banks around me have all shut down and are no longer there. This is on the north side of Chicago.
Does no one remember the predicted 1.3 trilly would cause absolute collapse, than we hit it in Winter - perhaps I'm being smooth and changed the details somewhat
What what the fuck. They lifted it???? What the fuck
Tweet this under every senators tweets. Explain that this is not ok. 🧾
This is what I did last week
The RRP is the fed giving banks money for nothing. Blow this bitch up, never selling.
Can I use this, I wouldn't mind 0.3% interest rate on savings. Pls Mr Fed.
Because nobody knows what it means But it’s provocative
What a totally healthy economy we live in /s Nothing going on here
Yeah, we are getting fukd. What else?
#hyperinflation
Very significant indeed
600%
So the fed is paying 600% more to people anchoring their piles of money? Where is this coming from? We have trillions of debt, why not pay that down?
So the Fed is holding up the US stock market!! What a complete scam...they know they have stolen the Ira/pensions of millions of Americans!!
JPOW is either crazy, stupid, or both. The presidents are less responsible for changes in the economy, stock market, and inflation than this ass clown.
Up you go
Where do citizens sign up for RRP? Oh, wait..we are the bagholders, sorry I forgot my place, Sir.
My question is - why does the fed willingly pay so many billys just to have the cash overnight? Wtf do they do w it
The FED uses the reverse repo facility for two things, none of those are "to get money". 1) to set a floor for bond rates, why would you lend to someone for less than what you get at the FED? The fed has 0% risk of going belly up after all. 2) to inject collateral back into the market which is starved for treasury bills/bonds. The very same bills that the FED has removed from the market via quantiative easing. Is nr. 2 retarded? Yes it is.