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Lou Crandall & Joseph Wang: A Monetary Plumbing Masterclass

Forward Guidance

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The Fed's Funding of the Treasury

Reverse repo is essentially practically a deposit facility for people that could just park their money at the Fed. The origin of all of this was the huge expansion of the Fed securities portfolio. Treasury's interest exposure has been transformed from long-term fixed rate debt to a floating rate instrument, where the cost is blend of IER and RRP rates.

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