Now on top of this, what if you create the truly risk-free asset (the reverse repo) and let $1.8 trillion of liquidity drain from the market in less than a year?
US Dollars in the public domain has shrunk by $370 billion since December and now at the lowest level since June. (2/ pic.twitter.com/TJrTMFkfht
— TheLastBearStanding (@LastBearStandng) March 23, 2022
The RRP is not "excess liquidity" that will come to save the market. If money was going to come out of the repo to catch rising yields it already would have. Instead you have a reflexive risk-off liquidity trapdoor.
An "unthinkable" liquidity crisis. /4)
— TheLastBearStanding (@LastBearStandng) March 23, 2022