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Lou Crandall & Joseph Wang: A Monetary Plumbing Masterclass

Forward Guidance

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The Dangers of the Reverse Repo Facility

The Fed doesn't actually have complete control over how many reserves are in the banking system. Joseph, could you explain whether you agree with it or not? I want to get your opinion on it later. So FRN, I believe stands for floating rate note, which means that interest expense goes up as interest rates rise. We need to cut it so that the money stops flowing out of the banks and into the money market funds and into the reverse repo.

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