WHO is the Fed Bailing Out? November 2019 Repo Market Update


Hey everybody. Jeff
Nabers here. Welcome back. We’re talking about the
fed repo bailouts. Why? Because they’re still going on and October
the news was the fed bailouts and the repo markets will continue until at
least November 4th it’s November 12th and I’m recording this and they’re
still doing them coming up. We have a serious problem. If you didn’t open your windows and
look out in the real world on paper, we’re in an economic depression, but because of all of this
financial engineering, we’re sitting here looking at a
scoreboard and add the control of that scoreboard is the federal reserve and
they’re manipulating the scores through interest rates to juice the stock
market up and to juice other measures of financial strength up when behind
the scenes there’s a lot of financial weakness. What the repo market bail outs represent
is that after a long string of the VAD winning battle after battle
in manipulating interest
rates to keep the economy propped up, we may be reaching
a point where they lose the war, so why are they doing the bailouts?
That was the topic of our last video. In this video we’re going to talk
about who is getting the bailout money. Comments were recently made by our fed
overlord Jerome. Okay, can’t say that. Okay. Let’s look at some recent comments
made by fed chairman Jerome Powell, where he spoke about banks
not as borrowers in the
repo market but as refusing to lend. So let’s just take this at face value
and not assume that it’s misdirection. This brings us to the question, who’s
borrowing the money in the repo markets? If it’s not, the banks found an interesting article
from wall street.com link in the description below. In this article it
brings an example of AGNC investment Corp, which is not a bank. It’s actually
a real estate investment trust. So here’s what AGNC has essentially done. They have raised equity
money from investors in the
amount of about $10 billion, but have been borrowed about
$100 billion from largely, you guessed it, the repo markets. So they’re borrowing from the repo markets
that under 3% interest and investing in mortgage back securities
at a higher level of interest. This is what’s known as a free money game. Borrow at one interest rate, invest at a higher interest rate and
the spread or the difference is your profit. So far so good,
right? What’s the problem? The problem lies in the
difference in timeframes. The investments they’re making
are longterm and they’re
making those investments with money that they borrowed short term. The majority of the money they have
borrowed is coming from the repo market, some of which is due back the next day, some of which is due back 14 days later, which forces them to have to roll
over the debt or renew the debt. So they’re constantly
reborrowing from the repo market. And this means that for their
scheme to continue to work, the repo market needs to continue to
offer cheap money at interest rates lower than what the market wants. Their is a bet that the federal reserve
will continue to successfully keep interest rates lower than what
a free market would provide, which becomes a bit troubling. When we saw the interest rates
spike to over 10% in September. Now it’d be clear, I’m not saying that specifically AGNC
needed a bail out or that AGNC is problematic or the
agency did get a bailout. What I am saying is that there are many
companies like AGNC who game the system and borrow cheap money and invest for
a higher interest rate and make that spread. They’re playing
that free money game, but it only works when the
interest rates stay low. So in a way we are nearing or at some
sort of major economic crossroads or tipping point. Interest rates serve
an important function in economies. Interest rates are between
borrowers and lenders, but over recent years the fed has stepped
in as an unrelated third party and push interest rates lower than
borrowers and lenders would agree to independently. As this has continued to occur, the structure of our financial system
has more and more begun to resemble that of the Soviet union and its central
planning and less and less resembling the United States financial system that led
to all the growth and prosperity of the 18 hundreds and 19
hundreds. So let’s recap. The repo markets to some extent are being
used as a source of artificially cheap capital to just make
free money out there, uh, with financial engineering in a way that’s
completely disconnected from the real economy as covered in previous
videos. In the real economy, real unemployment is extremely high. Consumer debt levels are higher
than they were in 2008 government. That levels are higher than everybody
thinks they are and higher than they were in 2008 and almost all
measures of the real economy. We have a serious problem on paper. If you didn’t open your windows and
look out in the real world on paper, we’re in an economic depression, but because of all of this
financial engineering, we’re sitting here looking at a
scoreboard and add the control of that scoreboard is the federal reserve and
they’re manipulating the scores through interest rates to juice the stock
market up and to juice other measures of financial strength up when behind
the scenes there’s a lot of financial weakness. What the repo market bailouts represent
is that after a long string of the fed winning battle after battle
in manipulating interest
rates to keep the economy propped up, we may be reaching a point where they
lose the war and when interest rates go higher, all of the funds and institutions and
banks and investors and various economic players who have been using strategies
that depend on cheap money will have some serious problems. Now, the fact that the bailouts are continuing
to happen in the repo market could mean that they’re working. It could also mean that they’re not
working and if they’re not working, we may see them switch from bail
outs to bail ins as a strategy. It’s an emergency measure that may
become necessary in the eyes of Congress. If these cracks in our
system continue to spread. I’ve been promising you a video
on bail ins and it is coming next, so make sure that you are subscribed.
If you’re not already subscribed, if you like staying plugged
in to financial news, that empowers you to take control of
your finances and bail out yourself. Then made sure that you click the
like button and a comment below. Let me know what you thought of
the video. That’s it for this one. I’ll see in the next one where we
talked about bail ENS. As always, check the links in the
description for further resources. Thanks for watching and I’ll
see you in the next video. [inaudible].

5 Replies to “WHO is the Fed Bailing Out? November 2019 Repo Market Update”

  1. I hope the oligarchs are trembling as they peer into the abyss below. They wont be held accountable but I am going to enjoy watching their world vaporize in front of them.

  2. But you never said WHO specifically the Fed is bailing out. Deutsche bank most likely. Must be a crapload of US bank exposure to DB for the Fed to get involved. Because you didnt name names, felt like click bait.

  3. Hello your comment about the banks trying to secure a spot because the music may stop?? Well let's see the federal reserve is not federal and it does not have a reserve!! DO YOURS OUN RESEARCH!! YOU WILL FIND OUT…
    (THE FEDERAL RESERVE HAS LOST ITS LICENCE!!!)
    WAIT TILL THAT COMES OUT THE THEY WERE PRINTING AND PROPING UP THIS MARKET ON A REVOKED LICENCES!!)
    SEE THOMAS WILLAMS of THI OR ASK DAN LUZT of you tube!! Wait till that comes out that they federal reserve did all this on a revoked or suspended license!!!all you need to do is check on who provides them they're licence and yes they do need formal approval I know who the entity is but you should do your research!!! What a story this will be when it hits!!

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