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In a past life I was a economist (before that, a Chinchilla in case you were wondering). This is where I write about the magic of markets and the absurdity of the financial world.
I get turned on by charts
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"Central bank officials are discussing plans to use so- called reverse repurchase agreements to drain some of the $1 trillion they pumped into the economy"
Fed Said to Start Talks With Dealers on Using Reverse Repos - Bloomberg.com
I’m sure if I took the time to grok it would become sensical, but at the moment it would be much more pleasing to simply say “reverse repurchase agreements?” Are you f*cking kidding me?
What’s worse is that the industry term for such transactions are “reverse repos” which a lyaman would bring to mind getting your unpaid car given back to you … which isn’t really how we want American’s thinking the government is treating the banks and all the loans. It sounds like we’ll be giving the banks back the money that we loaned them
(via tedr)
I’ll try and break it down a bit more. You’re right that ‘repo’ sounds like repossession, but hopefully Bloomberg readers at least know that there is a difference between the Federal Reserve and a no-credit-check discount car leasing company.
When the Federal Reserve wanted to stimulate the banking system they bought up securities (it used to just be government bonds, but has now expanded beyond that) with money from the treasury. Now, they want to sell these securities back to the public (and by public, I mean large institutional investors and banks) to pull back in some of the money to reduce the risk of inflation/devaluation of the US dollar.
That’s the gist of it, at least.
