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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Tommaso who wrote (233954)4/7/2003 11:14:04 AM
From: UnBelievable  Read Replies (2) of 436258
 
The Daily RP's That The Fed Makes

Are loans from the Fed to the primary dealers which use treasury bills as collateral.

The primary dealers own T Bills. They borrow cash against them from the Fed (at a lower interest rate than the T Bill is paying which is cool in itself). They then have cash which they can use to buy equities and derivatives.
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