the US Treasury may also issue more debt to increase the supply of safe assets, thus offsetting the compression shock end result: more safe assets/prime collateral provided to markets. remember that the newly issued treasuries are likely to be rehypothecated several times

Illya Gerasymchuk 2025-08-19 10:40

the global financial system depends on the abundance of this collateral, otherwise - defaults, margin calls, etc i wrote a thread/article explaining how US Treasuries are the dominant collateral in short-term wholesale debt markets (e.g. repo). read here: https://illya.sh/threads/@1751726431-1.html