/biz/ - Business & Finance

>interest rates rise
>low-yielding bonds collapse in value
>banks become insolvent
>banking crisis
>capital flies into money market funds
>money market funds park capital in reverse repo's
>reverse repo rate is directly set by the fed
>over $2.2T parked in reverse repo's
>suck suck suck
>>>>you are here<<<<
Scenario A: The Fed continues to hike
>capital outflows continue
>suck suck suck continues
>more banks collapse
>deflationary collapse
>fed pivot, leading into...
Scenario B: The Fed slashes rates
>reverse repo market yield drops to nothing
>those trillions of dollars flood out of parking
>hyperinflation