In Plus episode 449, we answer a member's question about retaining an investment advisor. We compare bank-offered money market accounts and money market mutual funds. We review what repurchase agreements are and discuss at what point the Federal Reserve will need to stop allowing its bond holdings to mature as part of quantitative easing. … [Read more...]
286 Plus: February 2020 Investment Conditions and Portfolio Review
In Plus episode 286 for the week of February 7, 2020, we review current investment conditions as of early February 2020, including market valuations, economic trends and market internals in light of the coronavirus pandemic. We consider how the Federal Reserve has essentially purchased all of the net new issuance of Treasury securities since September and whether that is likely to continue. We also review David's portfolio. … [Read more...]
270: Repo Rates Soared—Here’s Why It Matters
How a liquidity crunch in the short-term lending markets sent interest rates soaring. Why this is a huge blunder on the part of the Federal Reserve, and what it means for us as individual investors. In this episode you’ll learn: What are repurchase agreements and how are they used to finance U.S Treasuries. How outflows from money market funds and hoarding by banks led to a liquidity crunch that caused repo rates to spike to 10%. Why banks are hoarding reserves held at the … [Read more...]
169: The Debt Ceiling—What Happens If the U.S. Defaults
What could happen if the U.S. Congress doesn't raise the debt ceiling and defaults on U.S. financial obligations. Photo by Augusto Navarro In this episode you’ll learn: What is the federal debt ceiling and why does Congress always wait until the last minute to raise it. How long has the debt ceiling been in place. What would be the consequences of default by the U.S. government on its obligations. Why does the government continue to run a budget deficit instead of a … [Read more...]
MNY029 Plus: Quantitative Easing
In this week's Money For the Rest of Us Plus episode, I discuss: Quantitative easing as it pertains to repurchase agreement collateral and its impact on interest rates. Will the Federal Reserve sell its holdings of bonds? The Fed's reverse repo program. Nassim Nicholas Taleb's precautionary principle as it applies to QE and GMOs. Karl Popper's concept of the piecemeal engineer. Feedback from listeners on the interlude music experiment. The episode length is 17 minutes. … [Read more...]
