The guy talisman is absolutely clueless about where the increase in RRPs are coming from. Also clueless to the extent that he thinks the Fed is draining reserves.
The RRPs are increasing dollar for dollar with the Treasury's drawdown of its cash balance through T-bill paydowns. The Treasury has redeemed almost a trillion in T-bills since Feb 23, and continue to do so as it spends down its massive cash hoard. The holders of the redeemed bills, mostly money market funds, get cash from the Treasury, and now there's no paper in the market for them to roll into, so they voluntarily deposit it at the Fed in the form of overnight RRPs.
This is overnight money. It's the same as cash. There's virtually no effective difference between the Fed's RRPs and the reserve deposits that banks hold at the Fed.
The Treasury will start reissuing bills when the debt ceiling is lifted. The Fed's RRP account will go back to zero as the MMFs buy the T-bills that the Treasury issues.
The idea that the RRPs drain liquidity from the system is hogwash. It's a slush fund for institutions to hold cash while they're waiting for T-bills to return to the market.
Keep posting this garbage, JP. It gives me something to do. As if I don't have enough work.
But I cannot allow economic nonsense posted on this site to simply sit here unanswered, as if it's factual. It's useful only to the extent that it shows just how ignorant and clueless most mainstream economists are. It's mind boggling that none of them actually follow the accounts that they're talking about. They have no understanding whatsoever of the fundamentals of double entry accounting and balance sheet analysis.