IOER is Coming

Important because if the fed is losing control of the fed funds rate that tells us that they're going to lose control over every single interest rate along the entire yield curve and in the entire u.s economy so if repo rates explode higher mortgage rates will also explode higher.

The takeaway is if the fed comes in and tries to micromanage mortgage rates if they're going up due to inflation expectations they're going to have to print more bank reserves this could take t bills negative if the t bills go negative this would affect the money market funds which could lead to another repo spike if the repo rates spike ironically so do all of the interest rates in the real economy including mortgages so as usual the fed could paint themselves into a corner by trying to solve the problem of high mortgage rates they exacerbate the problem and create even higher mortgage rates than they had to begin with.

medium doom? maters by the sliding door?

We are in a Doom Vortex:

1) Too many bank reserves - Qualitative easing

2) Result in negative interest rates from all the t-Bills, which could lead to a huge blowup in the Repo market (everyone taking their money out of the money market funds).

3) Uncle Sam turns into the largest subprime borrower in history.

4) So the most realistic alternative is for the Gov to spend more money.

5) By doing so this could increase inflation.

6). Which makes mortgage rates spike.

Therefore the Doom Vortex of today....... and...... reset is on the way. Don't believe it? Go ahead and


Last Edited by midijeep on 03/06/2021 11:38 PM

oh no need to sell me doom.

i thought it was black helicopters launching guillotine shaped rockets time back in '08.

i fully anticipate some massive inflation here before long - it will be the dam giving way some day. little bit then all at once.

Nope, you don't get it. (again)

They can only print so much money till it blows up the bond market.

Interest rates spike - money goes bye-bye.

The economy stops dead in it's tracks.

Deflationary DOOM.