The traditional way to solve inflation is to raise the dollar interest rate, but today the Federal Reserve has lost the capital to raise the dollar interest rate. On the one hand, raising interest rates is to absorb domestic and foreign dollars and return them to banks, but now the world is dollarized and dollars are constantly returning to the United States. The Fed is doing everything possible to stop the dollar from flowing back, but raising interest rates will accelerate the dollar's return. Where can the Fed stand it? In both cases, the American people are trading stocks with loans with near-zero interest, and most enterprises are struggling on the verge of bankruptcy, supported by dollar loans with near-zero interest. Once the interest rate is raised, where can the fragile economy of the United States bear it?

Therefore, the Fed can only choose reverse repurchase to cure inflation. The normal issuance of US dollars means that the Federal Reserve sells printed US dollars to banks, and banks sell newly printed US dollars to the market in batches through "money-for-money" game investment and loans. The so-called reverse repurchase, in fact, is the Fed's repurchase of the bank's surplus dollars. Although this is a last resort, after all, one can avoid raising interest rates in the US dollar, and the other can accurately reverse the US domestic surplus dollar and avoid foreign surplus dollars. If the circulation of US dollars decreases, inflation will naturally ease.

The Fed wants to save the economy in a piecemeal way, or to quench thirst by drinking poison, which can only delay the collapse of the American economy at best.

Why do you say that?

Because the American government is too short of money, the bubble economy in the United States is also activated by the continuous injection of newly printed dollars, and the annual trade deficit of more than 800 billion dollars in the United States is also balanced by newly printed dollars. Whether it is the American government, the American bubble economy or the American international trade balance, it has long been supported by the Indian dollar. Now not only can't print dollars, but trillions of dollars have to be reversed. What do you want the Fed to do with so many surplus dollars?

Some people say that the reverse repurchase dollars are used to buy US Treasury bonds, but the dollars used to buy US Treasury bonds still need to be circulated to the market. The key point is that it is the serious surplus of dollars circulating in the American market that has led to serious inflation in the United States!

Of course, it is impossible for the Fed to burn the reverse repurchase dollars. Because the newly printed dollar is only dollar paper, and it is only a big sheet piling when burned, so it is not a big problem. Dollar reverse repurchase is already wealth. Who will make up for such a big deficit by burning so much wealth?

In a word, you have to pay for muddling along. For more than 70 years, your Federal Reserve has printed astronomical dollars and harvested astronomical wool all over the world, making Wall Street and the US government rich. Now the world has been dollarized, which eventually leads to a serious surplus of dollars. No matter how big this consequence is, it can only be borne by you, the Federal Reserve and the US government!

Many people don't understand what the Fed reverse repurchase is, so they answer questions there. It's ok to hack America, but you have to have basic knowledge and logic, right? It's not too late to know the details. Let's briefly talk about what the Fed reverse repurchase is.

The reverse repurchase by the Federal Reserve is actually a tool for short-term recovery of market currency. For example, I opened a bank with a deposit of 654.38+00 billion. I asked all employees to go out and borrow money. As a result, I only lent 60 billion dollars for a long time, and I couldn't lend the remaining 40 billion dollars. This $40 billion is the deposit of depositors in our bank, which is to pay deposit interest to depositors. If you can't get a loan now, it means that you have paid the deposit interest for nothing, but there is no loan income.

In order to reduce losses, the bank must find a way to withdraw the $40 billion. At this time, the Federal Reserve said that you can temporarily return the money that has not been used up for a period of time. Returning the money from the Federal Reserve is equivalent to lending it to the Federal Reserve with interest. The bank thought about it. Although there is little interest on giving money to the Fed, it is better than no income at all. So the bank lent the money to the Federal Reserve and got back the principal after the loan expired, earning some interest by the way.

The above process is called reverse repurchase by the Federal Reserve, which is actually a financial tool to reduce the money stock in the whole market.

It turns out that the amount of reverse repurchase by the Federal Reserve is hundreds of billions of dollars less every day, but this year's data has greatly increased, constantly creating historical records. In mid-June, it reached more than 500 billion dollars a day, which is already very amazing. Now it has reached more than $900 billion a day, and it is expected to exceed $1 trillion next.

What does this mean? It means that there are too many dollars in the market. US inflation data in May all hit record highs. Cpi rose by 5%, core pce rose by 3.4%, and the rapid rise of American prices led to serious inflation. Therefore, the number of reverse repurchase by the Federal Reserve will continue to increase at a record level. In the final analysis, reverse repurchase is only a short-term way to "collect money" after the United States faces the threat of inflation. To get rid of inflation completely, we must raise interest rates.

To sum up, reverse repurchase is a means for the Federal Reserve to recover the inexhaustible dollars in the market. Of course, it is only short-term, and the money has to be returned to the financial institution after the expiration.

The reason why the figure reached a new high and the ring-on-ring figure increased sharply is that there are too many dollars in the American market, which has far exceeded the amount needed to maintain the normal operation of the economy. The bank can only return the money to the Federal Reserve.

It shows that the United States has been using foreign gold deposited in the United States for reverse repurchase. The next step for the United States is to lower the price of gold and raise the trend of the dollar. The United States ignored the rules of the international financial system. Began to make great use of the domestic gold reserves in the United States. (including gold deposited in the United States by countries all over the world).

After more than a year of large-scale water release, the Fed finally got fed up. In recent months, we have been strengthening reverse repurchase to withdraw funds.

For example, since the second quarter of 20021,the scale of overnight reverse repurchase by the Federal Reserve has been increasing, and the daily trading volume has continuously exceeded 1000 billion and 200 billion dollars. . .

Especially after the adjustment of reverse repurchase rate in June, the scale of reverse repurchase continued to hit a new high. On June 30th, the scale of reverse repurchase was close to US$ 65.438 billion, and 90 counterparties directly participated, directly reaching the highest level since 2065,438,006.

Throughout the second quarter of 20021,the Federal Reserve implemented reverse repurchase of more than 20 trillion yuan. Compared with 1 quarter, the scale of this reverse repurchase increased by 4400%. This reverse repurchase scale is a bit crazy.

However, many netizens are puzzled when they see the reverse repurchase of the Federal Reserve. What is the Federal Reserve reverse repurchase? Why should we implement such a large-scale reverse repurchase?

Financial practitioners are no strangers to the concept of reverse repurchase, which is an important tool used by central banks in various countries to regulate market funds, including China's central banks. However, the reverse repurchase implemented by the Bank of China is different from that of the Federal Reserve, which is just the opposite.

In China, reverse repurchase means that the central bank buys securities from primary dealers, including government bonds and central bank bills, and then major commercial banks borrow funds from the central bank; Reverse repurchase usually has a specific date. After the agreed date, the central bank will sell the securities to the primary dealers and then withdraw the funds.

Through reverse repurchase, the central bank can adjust the supply of market funds, and when the market funds are relatively scarce, it can put liquidity into the market through reverse repurchase.

The reverse repurchase in the United States is just the opposite of that in China. Reverse repurchase in the United States means that the Federal Reserve sells securities to the market, including short-term treasury bonds and other bills, and then major commercial banks lend to the Federal Reserve to earn interest income. This reverse repurchase by the Federal Reserve can reduce the liquidity of the market and withdraw funds.

In the second quarter of 200212002, the reason why the Federal Reserve greatly increased the scale of reverse repurchase was mainly based on three considerations.

The Fed is relatively independent. It is not controlled by the United States government. In the implementation of monetary policy, three factors are generally referred to.

First of all, CPI is rising.

The increase of CPI is an important factor affecting the Fed's monetary policy. When the CPI increases greatly and the United States faces greater inflationary pressure, the Fed will tighten liquidity.

The Fed's recent increase in reverse repurchase is actually related to the inflationary pressure in the United States.

Since March 2020, the Federal Reserve has launched a number of stimulus plans to save the market and stimulate economic development, and opened up unlimited QE. As a result, a lot of liquidity has been released to the market. Since last year, the balance sheet of the Federal Reserve has doubled to a record $8 trillion, and the M2 of the United States has also increased significantly. From March 2020 to now, M2 has increased by at least $3 trillion.

The original intention of the Federal Reserve is to stimulate economic development by releasing liquidity. However, judging from the actual performance of the American economy, the real economy cannot consume such a large amount of liquidity, so the excess liquidity has not brought economic growth, but has turned into rising prices, which has made manufacturers and consumers miserable.

From 2020 to now, many prices in the United States have risen sharply. In April of 20021year, the CPI of the United States has reached 4.2%, and it is estimated that the CPI will reach about 5% by the end of 20021year.

Moreover, from the perspective of CPI alone, you may not be able to directly feel the current price increase in the United States. In fact, the price increase in many parts of the United States is far more than 5%.

For example, the national house price index of case-Shiller in the United States rose to 14.59% in 202 1 year, the fastest increase since 1988 was recorded.

In the context of rapidly increasing inflationary pressure, the Fed can only increase the intensity of reverse repurchase.

Second, economic growth.

Economic growth is an important reference for the Federal Reserve to implement monetary policy. When the economic growth rate is considerable, it shows that the monetary stimulus has achieved the expected effect, and then the Fed may start to tighten liquidity.

Judging from the actual performance of the American economy of 202 1, the growth rate is still relatively ideal. According to the latest revised data of the United States, in the first quarter of 20021year, the GDP of the United States was raised to $538 1 billion, a year-on-year increase of 6.4%.

Moreover, according to the current economic growth rate of the United States, 202 1 will maintain a relatively fast growth rate throughout the year. For example, according to the latest forecast of IMF, the economic growth rate of the United States in 20021year is expected to reach around 7%.

In the context of considerable economic growth, the Fed will definitely not continue to open loose monetary policy, but consider tightening monetary policy.

3. Employment rate

After the outbreak of the epidemic in 2020, the American economy was greatly affected. Throughout 2020, the economy has experienced a relatively obvious decline, and the corresponding unemployment rate is also rising.

However, after the large-scale stimulus plan was launched, the American economy recovered obviously, and the corresponding employment rate also rebounded obviously. According to Goldman Sachs' prediction, by the end of 20021,the unemployment rate in the United States will drop to 4. 1%, and it will return to the level before the COVID-19 epidemic.

After the unemployment rate continues to fall, the Fed will not continue to maintain a loose monetary policy.

Based on the above three data, the performance is relatively good, even exceeding expectations, indicating that the Fed has achieved its set goals through loose monetary policy, so the market's expectation of the Fed's interest rate hike is increasing at present.

In this context, the Federal Reserve has continuously started reverse repurchase, and the reverse repurchase rate has risen from about 0% before to about 0.05% at present, which has become a good hedge channel for many capitals.

Moreover, according to the current performance of the US economy, we do not rule out that the Fed may further increase the scale of reverse repurchase in the future. After all, there is too much liquidity in the United States at present. From 2020 to now, the cumulative liquidity released by the United States to the market has reached at least $5 trillion. If reverse repurchase is not strengthened, it may lead to increased inflationary pressure, which may be a prerequisite for the Fed to raise interest rates.

If the US economy continues to improve and CPI continues to rise in the future, it is not ruled out that the Fed may raise interest rates. Therefore, in the process of investment, everyone should make a good prediction in advance and take corresponding measures to avoid risks.

Buy your own national debt, and buy the remaining national debt that no one buys or no institution buys.

Is to use the assets in hand to recycle dollars in the market. It seems that inflation is so high that the Fed is a little scared.

This shows that hyperinflation in the United States is coming. We might as well snap up high-priced basic materials in the United States, such as mineral gold and necessary consumer goods, and at the same time increase the tax and quota management of domestic export materials to the United States to prevent us from exchanging physical goods for a large number of depreciated dollars.

The epidemic in COVID-19 is far from over, and it is only the wishful thinking of some countries with serious epidemics that the world economy will return to normal soon. Suppose we saved the American economy and helped the United States control inflation. However, according to the style that Americans always turn their backs on others after doing things, we are doing something to save ourselves.

In addition, this time, the reverse repurchase of the Federal Reserve surged by 4,400% month-on-month, indicating that Americans have exhausted other means to control inflation. Only by sacrificing the economy and the stock market to defend the hegemony of the dollar, the only way to buy back excess currency is to use it. However, because most real industries in the United States have not recovered from the epidemic, workers in low-and middle-income families are seriously unemployed and need to rely on unemployment benefits for a living; The restart of small and medium-sized enterprises also needs a lot of liquidity support, and the US stock market is at an all-time high. Therefore, the Fed's reverse repurchase policy this time is only an expedient measure, and it is inevitable that a large number of banknotes will be printed in the future to put the US economy on the right track. It is a consistent practice in the history of the Federal Reserve to wait for the US economy to resume growth and then raise inflation to offset the debts owed to other countries.

Refers to the idle circulation of money in the market. Why is it called idling That is to say, there is no money to trade and no place to go. Reverse repurchase is to secretly take back the money you printed!

Positive repurchase is an open market operation conducted by the central bank to regulate the liquidity of market funds, which is divided into positive repurchase and reverse repurchase.

Reverse repurchase is a marginal operation (compulsory behavior) for the Federal Reserve to recover excess dollar liquidity by selling assets.

The overnight reverse repurchase of the Federal Reserve has the function of withdrawing liquidity. Qualified counterparties such as money market funds and banks deposit cash in the Federal Reserve in exchange for high-quality collateral such as US Treasury bonds.

At present, the overnight reverse repo rate is 0%, but funds are still pouring in, which means that funds chasing short-term yields have nowhere to go and can only be invested in the Fed without interest.

Therefore, the reverse repo rate actually acts as the lower limit of the Fed's interest rate corridor.

The Federal Reserve sold a record $485 billion of treasury bonds to 50 counterparties through overnight "reverse repurchase", which broke the record set on June 36, 2000/Kloc-0+36,5438+0, and then drew a lot of liquidity from the market, indicating that the liquidity of the US financial market is indeed in the trend of excess and flooding.

On the whole, the surge in demand for overnight reverse repurchase reflects that the "large-scale" QE bond purchase and fiscal stimulus after the epidemic have led to excess market liquidity, and the factors leading to the outbreak of this tool in the market have the following aspects:

In addition to the Federal Reserve's QE purchase of bonds, the US federal debt ceiling is expected to resume at the end of July, and the US Treasury's ordinary account deposited in the Federal Reserve needs to be continuously reduced in cash to meet the requirements. During the epidemic period, the relief funds given to national and local governments, entities and individuals also kept flowing.

At the same time, the principal and interest of government-supported enterprises (GSE) regularly flow into the repurchase market, and banks cut their balance sheets at the end of the quarter for regulatory compliance reasons, pushing more and more cash to the market, which can be called "liquidity tsunami".

To make matters worse, the U.S. Treasury cut short-term U.S. debt (T-bill) this year, and the net supply of short-term U.S. debt available in the market decreased by 424 billion dollars, which made it difficult for money market funds pursuing a safe rate of return to find suitable investment options in a low interest rate environment, and only put excess liquidity into the Fed, which also brought problems to the Fed in controlling short-term interest rates to below zero.

More and more analysts believe that if the Fed does not adjust the interest rates of key instruments such as reverse repurchase rate, the demand for reverse repurchase will continue to break through new highs in the later period, and the general guaranteed repo rate will continue to bear downward pressure.

Since the second quarter of this year, the scale of overnight reverse repurchase by the Federal Reserve has been increasing, and the daily transaction scale has successively exceeded 1000 billion US dollars and 200 billion US dollars ... By June, the reverse repurchase rate continued to hit a new high after adjustment, reaching the trillion-dollar mark on June 30, * * with 90 counterparties participating, and the number reached the highest since 20 16, all second.

What the hell is reverse repurchase?

Positive repurchase is an open market operation conducted by the central bank to regulate the liquidity of market funds, which is divided into positive repurchase and reverse repurchase. In China, if the market funds are too abundant, or even the RMB is "flooded", the central bank usually carries out repurchase operations to collect market funds, and vice versa; In the United States, on the contrary, reverse repurchase is a marginal operation (forced behavior) of the Federal Reserve to recover excess dollar liquidity by selling assets. In June, the Federal Reserve adjusted the overnight reverse repo rate, which was directly related. To put it bluntly, before the Fed sold assets to recover dollars, the interest paid to investors was zero, and now it is 0.05%. In this context, investors flocked in and rushed to buy.

What happened to America?

On the morning of May 27th, the Federal Reserve sold a record $485 billion of treasury bonds to 50 counterparties through overnight "reverse repurchase", breaking the records set in February 365438+February 3 1 20 15, and then withdrew a lot of liquidity from the market, indicating that the liquidity of the US financial market is indeed in a trend of excess and flooding, which is different from that in May. At present, the Fed's most important excuse for inflation is temporary rather than permanent, but once inflation lasts for a long time and the positive role of monetary policy on the labor market decreases, the importance of inflation will become increasingly prominent.

In addition, according to the Case-Shiller house price index, the house prices of the 20 largest cities in the United States rose by 14.88% in April, which is the highest level since 2005 1 1. Across the United States, the situation is even worse. Case-Shiller national house price index rose by 14.59% in April, the fastest increase since 1988 was recorded, exceeding the peak acceleration in September 2005. Earlier, EricRosengren, president of the Boston Fed, warned that large fluctuations in the real estate market may affect the "sustainability" of the 2% inflation target and threaten the stability of the financial market.