[toast0]

This is like 99% off topic, but my understanding of the repo market is that the loans are:

Short term, often overnight, but some are 7 days

Fully collaterialized, with good collateral like treasury bills

Interest bearing

So it seems to me like risk free money is to be made here, and sure, there's a market failure if there aren't enough private lenders, but why is it a problem for the government to step in?

[H8crilA]

Not to mention that it was normal to do repos in the US before the post crisis money market moved to the floor system (IOER), and currently is normal for most money markets around the world.

The grandparent has a point but he's barking at the wrong tree. It's all about the artificially low interest rates, world wide. Money supply is a prisoner of rates. Let's see how this setup unwinds...