hi sal, love all your videos.. in this case im confused because all other sources indicate that Repo Buyer is the person selling the securities and buying them again in the Future... While you say the money lender is the repo buyer. Can you confirm this?
@wirlybird540 I know it's confusing, however you're both right. When you think about the repo in buyer and seller terms then the seller is purchasing a repo and the buyer a reverse repo. However, when we talk about the federal reserve operating a "repo" it actually means a reverse repo from the Federal Reserve's point of you. If you don't believe me I'll quote Wikipedia: "Thus the Fed describes these transactions from the counterparty's viewpoint rather than from their own viewpoint."
would you say the fed prefers this method during a period in which it is "tightening"? it seems the FRN the bank received would be less likely to be multiplied via fractional reserve lending.
@cr1138 It goes both ways.The fed operates repos (from the banks' perspective) to increase reserves temporarily and boost the deposit multiplier depending on the length of the loan (anywhere between overnight and 65 days). As with reverse repos (from the banks' perspective, not the Fed's) reserves are reduced temporarily and interest rates increase as reserve demand increases which will reverberate throughout the banking system. Repo transactions form a strong basis of open market operations.
Sal, I understand that you have degree in CS. Are you planning to do any tutorials on Java programming? I would love for you to do some videos on introductory topics. Thanks
fabian: Seems like both the Bank and the Fed reserve collected interest. The Fed however devalued a set of bank treasuries (the watch) and waited for the Bank to pay back this artificial value, plus some interest. The person with the kidney work pays the most, for the Bank and Feds benefit.
Hey Sal, could you please make a video about the Riemman Hypothesis? It would really help if you could explain it .. cant really understand it for Wikipedia. :S
There's been some talk online about synthetic CDOs which are apparently of substantial quantity. According to these sources a large number of these synthetic CDOs are about to trigger some type of repurchase if more than 7 of 100 referenced banks fail. At this time 5 banks have failed with 2 or 3 partial failures equaling a total of 6 failures. Have you heard of these? My interest is in what the repurchase would mean. Do the owners of these have to rebuy or simply lose their investment?
Funny _and_ informative, well done Sal!
taragreene7 4 weeks ago
Why would the Fed feel insecure of shady dealings as you, as an individual did to enter a repo?
spyk316 3 months ago
keep it up sal!
lakerboy4lyfe 6 months ago
Great video, teaching people who have no clue in finance. I liked it. Just little confusing about Repo-sounds like a repossession
UstinovDmitry 7 months ago 2
hi sal, love all your videos.. in this case im confused because all other sources indicate that Repo Buyer is the person selling the securities and buying them again in the Future... While you say the money lender is the repo buyer. Can you confirm this?
wirlybird540 1 year ago
Comment removed
MrPlender 1 year ago
@wirlybird540 I know it's confusing, however you're both right. When you think about the repo in buyer and seller terms then the seller is purchasing a repo and the buyer a reverse repo. However, when we talk about the federal reserve operating a "repo" it actually means a reverse repo from the Federal Reserve's point of you. If you don't believe me I'll quote Wikipedia: "Thus the Fed describes these transactions from the counterparty's viewpoint rather than from their own viewpoint."
MrPlender 1 year ago
Thank you!
cjd48 2 years ago
Hi Khan ,
Nice Vid , keep em coming but Doesn't the bank run down it's own assets temporarily before it settles the repo and buys back it's treasuries ?
If it was a bad bank as you say then wouldn't that make the situation worse at least in the short run?
KLguy133 2 years ago
would you say the fed prefers this method during a period in which it is "tightening"? it seems the FRN the bank received would be less likely to be multiplied via fractional reserve lending.
cr1138 2 years ago
@cr1138 It goes both ways.The fed operates repos (from the banks' perspective) to increase reserves temporarily and boost the deposit multiplier depending on the length of the loan (anywhere between overnight and 65 days). As with reverse repos (from the banks' perspective, not the Fed's) reserves are reduced temporarily and interest rates increase as reserve demand increases which will reverberate throughout the banking system. Repo transactions form a strong basis of open market operations.
MrPlender 1 year ago
actually you confused reverse repo vs repo. You would have a reverse, and "I" in the video would have a repo...
tassov055 2 years ago 6
The start of this video is pure comedy! Keep it up Sal :D
MisterRothstein 2 years ago 2
Sal you have helped me so much on understanding inflation, but can you make a video about deflation.
I've written everything out on paper but I don't understand how the Fed cashes in its securites without causing all banks to become insolvent.
Boxmanboxman 3 years ago
LOL, wow. that was hilarious.. "For a reasonably low interest rate.... 10% a week..."
MidgetPhilosopher 3 years ago 11
The "Fed" is a private Bank. The public doesn't really own it.
vidsofgargator 3 years ago
Sal, I understand that you have degree in CS. Are you planning to do any tutorials on Java programming? I would love for you to do some videos on introductory topics. Thanks
philboy521 3 years ago
Very interesting!
Ritzoid 3 years ago
fabian: Seems like both the Bank and the Fed reserve collected interest. The Fed however devalued a set of bank treasuries (the watch) and waited for the Bank to pay back this artificial value, plus some interest. The person with the kidney work pays the most, for the Bank and Feds benefit.
lvecsey 3 years ago
Hey Sal, could you please make a video about the Riemman Hypothesis? It would really help if you could explain it .. cant really understand it for Wikipedia. :S
DeathCircleCity 3 years ago
LOL
wonderpope 3 years ago
There's been some talk online about synthetic CDOs which are apparently of substantial quantity. According to these sources a large number of these synthetic CDOs are about to trigger some type of repurchase if more than 7 of 100 referenced banks fail. At this time 5 banks have failed with 2 or 3 partial failures equaling a total of 6 failures. Have you heard of these? My interest is in what the repurchase would mean. Do the owners of these have to rebuy or simply lose their investment?
thoughtchallenge 3 years ago
I have a question.
When the money changes hands, who makes the interest on the money ?
The Federal government or the Bank ?
fabiandoulton 3 years ago
The Bank; the Bank owns the government and the people because they own all the wealth of the nation.
vidsofgargator 3 years ago