- cross-posted to:
- usa@midwest.social
- usa@lemmy.ml
- us_news@lemmygrad.ml
- cross-posted to:
- usa@midwest.social
- usa@lemmy.ml
- us_news@lemmygrad.ml
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can someone who is good at the economy explain why this doesn’t matter
So what this is talking about is the repo market. Basically, the TBTF banks are constantly making short term loans to each other (we’re talking literally a day or two) to make sure they’ve got enough liquidity to make all the transactions they need to happen, happen. In certain cases where there’s more demand for the loans than supply, the fed steps in and floats said market until things are stable again.
Now while this can sometimes be a sign of bigger problems, it can also just be a blip. There’s a combination of factors creating a momentary shortage. Also, because they’re short term, the fed will get this money back quickly. If anything would be a crisis indicator, it’d be if the TBTF banks didn’t pay back the fed.
Of course, it does go to show that when it comes to
, all talk of “but how will we pay for it?” goes out the window.I’m ok at economy, but this seems like nothing compared to the 2019-2020 propup, where overnights were trading in 20b-60b every day for months even before COVID. Right now it’s something to keep an eye on in case it develops into something interesting.
What goes out first - the US economy or Trumps health?
Yes
The two are intrinsically linked now. We need to keep pumping the man with steroids and Diet Coke or the whole system crumbles
As a fraction of GDP, it is a teeny tiny blip. In other words, this doesn’t mean anything
While it’s true that $18.5 billion is a small fraction of the overall GDP, focusing solely on that scale misses the point of what these operations signal. The size is less important than the context and the precedent.
This is part of a pattern of ongoing liquidity injections through the repo market. The fact that it ranks as the fourth largest since the covid crisis and exceeds the peaks of the dotCom bubble is a canary in the coal mine. It suggests that there are specific pressures or imbalances behind the scenes that the Fed feels compelled to address through large injections of capital.
May I have a little piece of the GDP as a treat?
Yeah, if it’s not a start of something bigger/sustained that is …
Central bank signals are a huge thing for this very reason, why their speeches and published data matter.
