Part 6/10:
Given the circumstances, one critical question remains: why did such a massive amount of funds funnel into reverse repo accounts in the first place? A review of relevant data shows that while the balance in these reverse repo accounts took off in the second half of 2021, the initial rise could not be fully explained. Government stimulus checks and increased government spending did inject cash into the economy, but instead of being used for traditional investments like T-bills, these funds found their way into the reverse repo account.