/biz/ - Business & Finance

>>56839372
Certified neo-nwo-citizen schizo understander here. RRP rate is the Fed's lever for creating a "soft floor" in short term interest rates. RRP is very simply an excess liquidity sponge. Normally excess liquidity gets parked in short term US Treasuries, 1 month t-bills. When the 1 month t-bill is below rrp rate, RRP sucks liquidity up. What's been going on is Yellen has been issuing t-bills nonstop to reduce supply of long duration treasuries and push their yield down, which real economy rates such as mortgages are benchmarked against. Since about the middle of the year 1m t-bill yield has been higher than RRP, thus the collapse in RRP balances as money flows back out.

When RRP empties a couple of things could happen.
>demand for t-bills as collateral stays constant
Other assets get sold off to acquire the necessary t-bills. A crash in somemarket somewhere by collateral needers.
>demand for t-bills dries up with RRP
Yellen notices, keep in mind she was the previous Fed Chair, and has to choose to spike short yields and drive money market fund yields even higher which may accelerate the bank walk of deposits out of the banking system or choose to spike long yields and interest rate shock financial markets and housing market, as the former is valued relative to risk-premium over a long bond and the latter has mortgage rates benchmarked to 10y rate + ~3%.

Also, the BTFP expires in March, which is where banks were allowed to park underwater bonds for par value in loans to cover up SVB & friends collapse.

Precious metals are moving because their suppression requires shorting with collateral. They can also be used to recapitalize central banks as their bond holdings gain losses through revaluation (devaluation) of the currency. PMs are the anchor of trust in a currency when debt-backing has failed.

>Ripple is interesting in that it's the only other system that does something with trust besides concentrate it into a central server