Part 2/10:
To grasp the implications of the current situation, we must first understand the Federal Reserve's reverse repo facility. This financial tool has recently witnessed a dramatic increase in utilization, soaring from nearly zero prior to 2020 to an astonishing $2.8 trillion in 2021 during periods of heightened interest rate adjustments by the Fed. Charts show that as the reverse repo balance peaked, it inevitably began to decline, now dipping below $100 billion, a threshold that raises concerns among experts.