Reverse Repo Madness

 The Fed is putting its foot on the gas (by printing money to purchase Treasury securities) and the brake (with reverse repo) at the same time: "The Fed is walking a thin tightrope between fighting off financial asset deflation (a stock and bond market crash).  To do this it needs to continue printing enormous sums of money.  But it also has to avoid the money printing from translating into Weimar-scale hyperinflation and a crash in the dollar.  Along with this, the Fed also needs to prevent the Fed funds rate from going negative. The RRP mechanism is the Fed’s attempt to “mop up” the excess liquidity that has accumulated in large pools at the spectrum of financial intermediaries (banks, money market funds, GSEs)."  https://investmentresearchdynamics.com/the-feds-reverse-repo-madness/

The result is a system that is very unstable.  It would be logical for the Fed to ease its purchases of treasuries to prevent excess liquidity, but that causes the stock market to drop, which the Fed doesn't want.  You would think that banks would have an incentive to loan more money to get a higher return, but businesses don't want to borrow.

I don't understand what is going on.  Maybe the situation will fix itself after the quarter end on June 30, but it is also possible that we will have a crash shortly.  It is also possible that we will have a burst of hyperinflation, where there is a one-time reset of many prices by 20-40%.  Read the link. 

"The inevitable conclusion is hyperinflation followed by a collapse of the dollar and the stock and bond markets. My bet is that it is too late to prevent the inevitable."