Joseph Wang Explains Quantitative Tightening

As QE ends, and the Fed embarks on it's quantitative tightening program, former Fed trader Joseph Wang explains everything you need to know about QT and what it means for the financial system.

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Disclaimer: Nothing discussed on On The Margin should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[lewiskent]

Thanks so very much for explaining the mechanics of QT. It is difficult to find information on what is done with the principal payment. Thanks for clarifying that the money is destroyed.

[stephanielavina]

The <Bitcoin, xrp,stocks,price has completed several pumps and dumps movements over the past week that may confirm a new bullish expansion phase which is about to begin . Eyes are still on what happens above the current local highs, not below, even as BTC price action is up 6% in a week. We cannot predict bottoms, but it was obvious things were getting ready to go down. Why are people JUST NOW realizing the market is bearish? Extremely bearish. Point is, be patient, and just trade to build capital for when we do bottom. Don’t let these institutions destroy you. And my advice, don’t spread yourself thin with too many coins. Market moves as a whole right now, red days mean red days for almost everything, Green Days will be the same. Paper gains and losses are normal throughout the investing cycle. Continue to invest and trade, don’t panic.’. Still love the trading techniques and advice . Digital currencies continue to reshape the world globally. It's hard for anyone who is against it right now. But from a trader's point of view, I think we really need more experts in this field to give newbies a sense of how the community works. I was able to easily increase my portfolio in just trading with Mrs Stacy Huth daily signals growing 0.1 BTC to 4.5 BTC. Her daily signals are very accurate and yields a great positive return on investment and she's available to give assistance to anyone who love crypto trading, you can contact her for inquires and profitable trading systems on Telegram @coin_signal10 or @coin_signal100 ** for any crypto related issues..

[alexmarshall]

This channel has great interviewers and guests! Just wanted to mention that.

[diamondhands]

Didn't understand half of it, too complicated for simple plebs like me

[IKTGWIW]

Thank you for Joseph's education on QT.

[fridrik]

I love this channel, but is it not a better idea to have a Blockworks Macro clips YT channel? I recommend that. I got way too excited thinking there were 3 news show out today hahaha

[Al-wtkf]

soon to be the best era for banks and insurance companies?

[phatster]

The cash future basis trade, aka picking pennies in front of the steam roller. In 2020, they got crushed. Paging Taleb..

[michaelfelli]

Regarding REPO ...

The Fed is already anticipating another 2019 Repo Market crisis. They've implemented an emergency "Standing Repo Facility" to decrease the stress that occurred in 2019.

So ... I expect a much more significant REPO CRISIS down the road (late 2022). The Fed has prepared for such a crisis.

“My experience from 2019 into 2020, if anything, teaches that the unexpected happens, and you need to be prepared for that, ” Mr. Williams said. The Fed needs to be confident that as it sets its interest-rate target, the rate will go where it is supposed to go, and “the repo facility does provide that, if you will, kind of insurance.”

Mr. Williams said a standing repo facility is unlikely to see much use in normal times but can offer help during market stress. “If there’s an unanticipated shock to supply or demand in short-term funding markets, or some kind of disruption, [a standing repo facility] will keep the short-term interest rates from spiking at a time when that’s not a desired outcome, ” he said.

[blank]

Can someone explain how deposits at Fed(reserves) work vs deposits at banks? For example, I want to see the accounting for when the TGA account is funded. Is it funded with reserves and cash but the cash is destroyed when sent to the TGA because it’s at the Fed? Conversely, when they spend, do banks that cash government checks, just create new deposits?

[jenniferbrazil]

Joseph, very clear, thank you. Your main concern appears to be cash being drained from commercial banking system, either by private accounts to refinance the FED, or to RRP ( because money market funds are presumably paying better interest than banks) Questions:
1. Trivially, couldn’t banks raise deposit rate to push back on money market funds
2. Aren’t the banks sitting on trillions of excess reserves? If they are excess, then they are not needed, right? So why worry if some of those reserves are mopped up?
3. Why does bank cash matter anyway? If the banks really need cash for liquidity, can’t Fed resupply by ordinary operations of temporarily swapping cash for securities ( on Overnight, weekly etc basis, not QE )?

[fixedoddsbetting]

Thanks for the video. I don't now how to think about it. As someone with low income it just seems like all this is placement and layering. And I am one of thr poor sods who does get to ching about of it. Only the minority do and they get to push other people of of reasonably paying jobs. As a person who has a reasonable income I would think it's a wonderful complex system and it works great for me. I would sit there and have to deliberate over where I am going on holiday next year. Possibly I should see if I can go into politics but I'm not connected and I've never wacked (metaphorically speaking of course) anyone.

[horizonq]

The most orderly way is some one loses.
Take your pick, some one will lose