The Fed's Bank Term Funding Program (BTFP), the facility that they introduced after the March 2023 banking crisis, now offers lower borrowing rates than the Fed pays in interest on reserve balances.

So, banks are arbitraging this by borrowing from the facility (i.e. from the Fed) at one interest rate, and then depositing that borrowed money with the Fed to earn a higher interest rate, and thus are earning that risk-free spread. They're arbitraging the Fed.

https://m.primal.net/HUun.png
https://m.primal.net/HUuo.png


Funny-money. And the Fed can't run out of money so they just let it happen.


They borrow against depreciated collateral at par, so this is doubly bad. 😬


Seems kinda like a...PONZI...


THIS IS HOW YOU KEEP YOUR GENERALS HAPPY

nostr:nevent1qqsgv0357njjdny6c6sre55mafvulp8qtvas29suqwv8zc85u9t0lfsppamhxue69uhkummnw3ezumt0d5pzp64suatdx2uqhn2xfu7cgjuqgqcrqadp864uxkv6wckf43atj860qvzqqqqqqyjpxh69


Anyone can explain me how that makes sense and why would anyone with access to it not max it out to maximize the spread?


It's a striking example of how financial institutions navigate central bank policies to optimize their financial positions. This arbitrage might be seen as a creative use of financial instruments or a sign of inefficiencies in the design of central bank programs.


A new twist to the term Insider Trading


The entire current system is a tangled ball of arbitrage and carry trades.

That’s the problem in a nutshell.


How does the BTFP rate get set? This seems like such an obvious thing the FED would (should? Could?) correct quickly. Still pretty unbelievable it’s even possible


They are doing this from decades.

Time to topple this system.


What a messed up shitty bs fiat f.ck
nostr:nevent1qqsgv0357njjdny6c6sre55mafvulp8qtvas29suqwv8zc85u9t0lfsppamhxue69uhkummnw3ezumt0d5pzp64suatdx2uqhn2xfu7cgjuqgqcrqadp864uxkv6wckf43atj860qvzqqqqqqyjpxh69


End of fiat regime vibes


More fiat inflationary games.


I hate the players AND the game.


BTFD > BTFP


Ah, that’s why it went up 20+% rapidly

https://damus.io/note1826a7lzphlxavc4e347n8kmz2lv47gyfecamsm4l0sj8qpkmwv3qjwsxta


But they have to have collateral to do it
So in essence the Fed has created a pump to suck up Treasuries (ie monetize the debt ie inflate)


Don’t BTFD on BTFP


nostr:npub1k3nyttxjdweup07r6sjcycw2yqc926je92yqud69lch7jlfm20esvgcydw bruh


pure clownery 🤡


Just a more opaque and hidden way for the Fed to give the banks money to bail them out


Whenever they do something stupid like this it is to avert systemic failure.


Anything is possible with clown money.🤡


How can these dudes sleep..... buy now pay later...much....   I love your chit its always top shelf! MC


nostr:note1sclrfa89ymxf434q8nffh6jee7zwqkemq5tpcqucw9s0fc2kl7nqcdy0es "We got hosed, Tommy.  We got hosed."


Is the Fed intentionally trying to lose money? Do you think this is a strategy to keep the US Treasury from getting those Fed "profits" checks they had been getting prior to the interest rate hikes?


From: nostr:npub1jggj3tdr33rrakqn0n7l0xyhnuuuhg2qwaeyl90xf8znex0wwldsx9qlx9


BUY THE FUCKING PUMP


wait

you guys have a sell button?


This is ... nvm, I don't even know what to say


It's funny how the Bank Funding Term Program got renamed to the Bank Term Funding Program when the wizards realized that it was too easy to use the acronym synonymously with Butt Fuck The People.


The Fed's Bank Term Funding Program (BTFP), the facility that they introduced after the March 2023 banking crisis, now offers lower borrowing rates than the Fed pays in interest on reserve balances.

So, banks are arbitraging this by borrowing from the facility (i.e. from the Fed) at one interest rate, and then depositing that borrowed money with the Fed to earn a higher interest rate, and thus are earning that risk-free spread. They're arbitraging the Fed.

https://m.primal.net/HUun.png
https://m.primal.net/HUuo.png


but..... they raised the rates to lower inflation


I'm sure they will offer this opportunity to the little guy too! 🤣


Sick 🤡


JPM balance sheet != street money.


Ponzi playing the Ponzi


Lmfaooooo


This creaking system somehow keeps going.  It's clear to most, even those outside finance, that it's going to break down at some point, but I absolutely cannot believe how long it continues.  I guess I shouldn't be surprised, given how long Japan has been going.  Complacent population can allow the game to run into true absurdity.


Interesting observation about the banks arbitraging the difference between the BTFP and interest on reserves. Do you think this was an intentional move by the Fed to encourage more lending by making it advantageous for banks to borrow from this facility? Or was it an unintended consequence that the Fed may need to address?


I ain’t even mad. Not bad