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Planet Money

How the government got hedge funded

28 min episode · 2 min read
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Episode

28 min

Read time

2 min

Topics

Investing, Economics & Policy

AI-Generated Summary

Key Takeaways

  • How do hedge funds profit from Treasury basis trades?
  • What risks do hedge fund Treasury positions create?
  • Why might taxpayers bail out hedge funds again?

What It Covers

Hedge funds increasingly dominate US Treasury markets through basis trades, creating systemic risks that could require taxpayer bailouts during financial crises.

Key Questions Answered

  • How do hedge funds profit from Treasury basis trades?
  • What risks do hedge fund Treasury positions create?
  • Why might taxpayers bail out hedge funds again?

Notable Moment

Phil Prince from Pine River Capital Management explains how Treasury futures are like eggs that will hatch into bonds, providing a rare hedge fund perspective.

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