Warning: Reverse Repo Reservoir Dries Up, Bank Credit Contracts – Wall Street’s $2 Trillion Lifeline Drains Rapidly, Posing Questions on Financing Washington’s Deficits

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The alarming contraction in bank credit, an event occurring only once in the past 50 years, adds a foreboding dimension to the rapid depletion of the 2 trillion-dollar Reverse Repo pot. As Wall Street grapples with financing challenges for Washington’s deficits, the ominous trajectory raises concerns about the stability of the financial system. At this accelerated rate, the strain on monetary dynamics prompts a warning that something is bound to break, heightening the urgency to prepare for the impending financial uncertainties likely to unfold around March/April 2024.

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