/Heresy Financial: The Fed Just Lit the Fuse for a Liquidity Crisis

Heresy Financial: The Fed Just Lit the Fuse for a Liquidity Crisis

In this episode, we discuss the recent change in the reverse repo rate, and how it has drastically shifted the flow of reserves in the financial system. When a counterparty with zero risk offers a higher interest rate than T-bills, you get a tsunami of cash sucked out of the system straight into the hands of the Federal Reserve.