Go Ahead Explain: "fixed-rate full-allotment reverse repo facility"

CalGun · Dec 2, 2013

Fed official strongly backs proposed repo tool, cites policy - Yahoo Finance

I will be the first one to tell you I do not understand the Federal Reserve system. I do believe they kept us from toppling hard in 2008/9 and since then by increasing money supplies and reserves in banks dramatically and that this may eventually hurt us in the long run but then I see this article and can only say, WTF, and how do they come up with this "$%^#%"

If someone wants to explain in English please do.

Blue_State · Dec 3, 2013

It looks like it is a tool to take money out of the system. Essentially, the Fed wants their policies of raising and lowering the money supply to take effect faster. When they take money out of the system, this "device" should find excess amounts and remove it from the system. It is another tool for the Fed to effect rates.

This announcement is another sign that the Fed is getting ready to raise interest rates. Buy that house now if you are thinking about it.

jonny5 · Dec 3, 2013

Sound like the fed is borrowing money from banks overnight and then paying it back in the morning with a little interest, which moves cash from the Fed to the banks. In effect theyre giving away money. No idea why.

Go Ahead Explain: "fixed-rate full-allotment reverse repo facility"

CalGun

Blue_State

jonny5

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