In one of our blog articles in October, we took a closer look at the “repo market incident” that caused the Fed to start pumping billions into the financial system again. At the time, the central bank described this development as inconsequential to its policy targets and outlook and successfully downplayed the significance of its own interventions as “purely technical measures”. Media coverage was also limited, very few of the real and serious concerns were aired and eventually the story was largely forgotten.
However, the fact remains that these regular cash injections are still ongoing. In our original post, we shared a few excellent videos produced by our friend Jeff Nabers, that clearly explained exactly what happened in the repo markets and the Fed’s reaction. Below, you’ll find his latest update on the topic of repo bailouts. In this video, Jeff looks at who is actually benefiting from these injections and presents a very interesting analysis of the policy’s wider implications.