Illya Gerasymchuk
Entrepreneur / Engineer
collateral gets reused/rehypothecated, reserves don't dealers re-pledge/re-use Treasuries, e.g. through repo and reverse repo. thus, the financing capacity of Treasury bills, notes and bonds exceeds their market value
retiring debt with gold revaluation would change the composition of liquidity: ➖ less US government bonds (safe collateral) ➕ more base money (reserves) and/or broad money (deposits) so the end result is more base and/or broad money, but less prime/repo-eligible collateral