More on my point - The bank charges interest on the $1.5 billion loan to the hedge fund. It never tries to collect the 1.5 billion owed not because they float the loan to the hedge fund, but because the bank is now the owner of the bond. The bank is also the holder of the repurchase agreement. This is where ¨repo¨ comes in…The repurchase or ¨repo¨ agreement binds the hedge fund into buying back the bond at a later date.
Nik calmly brings a rational analysis to the this area of the financial system based on deep experience whilst bringing invaluable knowledge to regular people to help them to better understand the world around them. Bravo.
Very helpful explanation, thank you. There is one detail that I am not sure about, however. In your example of the bond for the $5 billion bridge, the hedge fund goes to a bank to borrow money to buy the bond. In my understanding of the repo market, the bank does not ask them to pledge the bond as collateral - rather the bank actually becomes the owner of the bond. They enter into a deal where the hedge fund promises to buy back the bond at a later date, hence the term ¨repo¨ or repurchase. Is this correct? Or, what am I missing?
You gotta slow down and explain this stuff a bit slower, maybe some charts or visuals too. I'm deep on this topic and it's still really hard to keep up with your explanations.
30min of this channel is more valuable than a degree in economics.
This is my favorite Channel on Macro. That’s why I subscribed to the Bitcoin Layer Substack .
More on my point - The bank charges interest on the $1.5 billion loan to the hedge fund. It never tries to collect the 1.5 billion owed not because they float the loan to the hedge fund, but because the bank is now the owner of the bond. The bank is also the holder of the repurchase agreement. This is where ¨repo¨ comes in…The repurchase or ¨repo¨ agreement binds the hedge fund into buying back the bond at a later date.
Nik calmly brings a rational analysis to the this area of the financial system based on deep experience whilst bringing invaluable knowledge to regular people to help them to better understand the world around them. Bravo.
Really important video. Thank you, Nik!
Very helpful explanation, thank you. There is one detail that I am not sure about, however.
In your example of the bond for the $5 billion bridge, the hedge fund goes to a bank to borrow money to buy the bond. In my understanding of the repo market, the bank does not ask them to pledge the bond as collateral - rather the bank actually becomes the owner of the bond. They enter into a deal where the hedge fund promises to buy back the bond at a later date, hence the term ¨repo¨ or repurchase.
Is this correct? Or, what am I missing?
Thank you for your work!
You are explaining very well
Thank you Nik
This is great. Thanks
Took money out of silver and am in ASPS now. Magenta vector candles show a 500%-4000% gain without taking out the high
Thank you so much for explaining this! I’ve always wondered how it worked!
A diagram or chart would definitely help. Á la George Gammon.
Thanks for the good stuff!
You gotta slow down and explain this stuff a bit slower, maybe some charts or visuals too. I'm deep on this topic and it's still really hard to keep up with your explanations.
If banks have an infinite money glitch, why do I see all of these headlines that banks are failing?