How a liquidity crunch in the short-term lending markets sent interest rates soaring. Why this is a huge blunder on the part of the Federal Reserve, and what it means for us as individual investors. Topics covered in this episode include: What are repurchase agreements and how are they used to finance U.S Treasuries.How outflows from money market funds and hoarding by banks led to a liquidity crunch that caused repo rates to spike to 10%.Why banks are hoarding reserves held at the central bank even though there are over $1.4 trillion of them, up from $20 billion in 2007.How quantitive easing increases reserves and quantitative tightening reduces reserves.How the Federal Reserve was able to stop the disruption in the repo market, even though the central bank was caught off guard and could have prevented it.How individual investors can protect themselves from unintended consequences arising from the unconventional policies and experiments being conducted by the Federal Reserve and other central banks. Thanks to The Great Courses Plus and LinkedIn for sponsoring the episode. For show notes and more information on this episode click here. [0:20] The Fed loses control over policy rates, and repo interest rates soar.[2:19] What is a repurchase agreement (repo)?[5:02] Why the big players in repos pulled back on Sept. 16th.[8:38] Banks need more liquidity because of regulations.[12:53] Why reserves have fallen so low.[17:43] How does the reserve balance get reduced?[19:23] The Fed may have shrunk it’s balance too far.[21:36] What can be done about the reserve shortage?[24:17] What can we learn from the repo rate raise?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What are the three steps to better manage risk and get what you really want. Topics covered in this episode include: Why goods and services that lessen risk tend to cost more.What is the three-step process for assessing and managing risk.Why defining the risk-free option or asset is critical to managing risk.Why immediate annuities are the retirement risk-free option rather than a conservative investment portfolio.What are the two types of risk and how do we mitigate them.What is the difference between hedging and insuring against risk. Thanks to Dashlane and The Great Courses Plus for sponsoring the episode. For show notes and more information on this episode click here. [0:17] Weighing the risk and knowing how to make a decision under uncertainty.[5:00] Three steps for assessing and managing risk.[9:11] Finding the risk-free asset in a retirement plan.[14:36] Idiosyncratic & systemic risk.[16:40] De-risking and using hedges to create a risk buffer.[20:22] Identifying a sound insurance operation.[23:36] Using flexibility as a risk management strategy.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.