Okay? And let's think about the Let's think about their, their position in the money markets. Now, I prepared you for this a little bit last time. Okay? so we're But, but let's first think of them as a security dealer. So we have, if we think of the security dealer. I need to introduce a few concepts here. If we think of them, first of all, just as a security dealer, we can separate their book into two pieces. What I'm going to call a matchbook piece and a speculative dealer piece. Okay? And so, let's imagine that this dealer has securities in. Of 100 and securities out of 100. And these are the same securities, okay, so he has a, a shor, a long, a short position and a long position in the same securities. So this is what we mean by matched book. I'm not writing very well today. Matched book. Okay? The trainer model, ignores matched book, right? All of this gross position on the balance sheet here. Okay. Nets to 0, so it's right there. Okay? What trainer says dealers are worried about is their net position. Okay? Is it because that exposes them to price risk? Okay, so let's put that now on here, we'll call net financing here of 10. Okay, and then the financing itself, loans of 10, so I'm showing like a long position in bonds here, and I'm using this word for a reason you'll, you'll we'll come back to it, but think of that as a long position in bonds. Okay, that's finance by borrowing here. So here you do have a position, right? If the price of these bonds falls, okay, then you have a loss. If the price rises you, you have a gain. So it's this part of the balance sheet, okay, that Trainer was focused on. But if you look at the actual balance sheets of actual dealers, this is about the order of magnitude. You know, most of it is gross exposure, you know. Most of it is matched book. Only a little bit of it is net exposure here, okay? They're making a lot of money doing this, or they wouldn't be doing it. Okay? and that's not really in the trainer, in the trainer model. so we'll call this the speculative book here. Or the trainer book. Because that's what he's talking about. But, I just want you to appreciate that he's not talking about the entire, the entire book. Okay? But I didn't spell it out in clear detail. because I wasn't going to use them yet, okay? Now we're going to use them and we're to use them by flipping our attention, a little Gestalt switch, okay, from the security dealer, as a dealer in securities to the security dealer as a dealer in money. This is just to remind you this is on the New York Fed's website and it shows here, this line here memorandum reversed repurchase agreements. Repurchase agreements, overnight and continuing and term agreements here. Okay? You remember a couple of lectures back, when i think maybe when I was doing repo, okay, I said we can use these numbers to construct a balance sheet for the dealer showing them as a money dealer. Okay. And so let's just do that, let's just copy the numbers first. Okay. So this is now real numbers. Those were made up numbers. Okay? And we're going to call them a money dealer now, okay, because we're thinking. We're, we're thinking of the securities as just collateral for these money positions, and then thinking about the mo, the borrowing and lending in the money market that's happening using these securities. And so we have assets and liabilities. there's 854 of overnight reverse. [BLANK_AUDIO] Overnight reverse, there's 1253 of term reverse. There's 1796 of overnight repo. And there's 826 of term repo. Okay. here just to remind you, a reverse is the same thing as a repo except the other side, okay? So, if repo is borrowing money by giving securities as a collateral, reverse is lending money taking insecurities as collateral. So it's the same instrument, just. Just opposite sides. And that's what dealers are, they're on opposite sides of the same instrument. Well, that should make you think now, opposite sides of the same instrument? So, there's a matched book, somewhere, underlying all of this? Yes, there is, okay. So, let's calculate it. Let's rewrite all of this in matched book way. over here. So, this is the actual numbers. And now let's just use our concepts. Okay. And you can see that and, and, and, so we want to match up. And lets just say that these terms are the same terms, just because this is, this is for conceptual purpose. I don't know if they're the same terms. The data, it doesn't tell that detailed, okay. But just imagine. That these are all 1 month or something like that, term reverse and term and, and and term repo here. They're probably not, okay. But, but you can continue, you could elaborate the same style of analysis. So these are overnight, so there's 854 overnight and 854 overnight, okay, that would be match book, okay. We have some left over. how much do we have left over. I did this math before class to make sure that I got it right. Okay? So, here I'm doing exactly what I did with the securities. Right? I'm, I'm carving out the match book part. And now let's do the term 826 [BLANK_AUDIO]. And 826. These are billions by the way so these are large, large numbers. Okay. And so there's something left over then from the term too, and that number is 427. When you add both sides, there's also something left over. and that's 515 net financing. Okay? So this is like bonds, okay. These, these are bonds that are being financed in the overnight repo market, okay. And this is term repo, that's being financed in the overnight market, and it should add to 942. These, these things here. And it looks good, okay. So you see I haven't done, I haven't, the numbers are all the same, they're all the same, I have just rearranged them so that you can say this is the matched book part and this is the speculative book part. Okay. Now I want to do one more thing, okay. In order to help us move toward using the trainer model for banking. Think about these. this, these, these are bonds. Okay? Let's, let's move a little bit more. Let's think about these as bonds. Okay? These are bonds that the dealer is financing. And let's think about this, this dealer as financing them with term repo instead of with overnight, so we can separate out 2 different kinds of risk. Okay? How much term repo would you need to finance 515? Well, 515. Now we've added term repo to one side, we have to add term repo to the other side so that we maintain our, our balance of our [UNKNOWN] and we're not changing any exposures. Okay? And, you could see just by the math, that what that does is basically allow you to write. I'm just adding it up there, okay. We have two kinds of risk, okay, that the dealer is exposed to here. Okay? This bottom one, you have bonds and you're financing them in the term repo market. Okay, so this is the kind of trainer risk, this is price risk, this is bond price risk. So we know about that. We have a model about that. This is price risk. But what is this? What is this line, here? These, these exposures. So you see am reading across, am not, so am looking at each line as being a different exposure. So here, you're borrowing overnight and you're lending for a month. So you're borrowing short, and you're lending long, both of these are secured loans, secured with some kind of, of bond of some kind. And so you're basically a bank is what you're doing. You're, you're, these are like deposit accounts. Okay? This are, this is, this is demand deposit here and this a one month, a one month loan here. Okay? This is liquidity risk. This is liquidity risk that the dealers are exposed to because they have to roll this funding every day. Every day this funding comes due. In fact, it, it, they're, it's actually rolled. Typically you need to, the collateral comes back and you do it again. Sometimes there's, there's agreements to do it automatically, but, but you could pullout it's overnight repo. So, you, this is liquidity risk. This could be a run on the bank. The kind of thing that broke the reserve primary fund, okay? So, this is liquidity risk. So how do we think of, so we know how to talk about price risk, can we use the trainer model to talk about this kind of risk? And I want to suggest that we can. The important thing to emphasize is this balance sheet. Is the same as this balance sheet. I haven't changed anything. All I've done is rearrange it so it tells a different story, okay? All the numbers are the same.