Why the Federal Reserve is pouring money into the financial system • Hacker News Board

Re: Why the Federal Reserve is pouring money into the financial system

#31

Post by turk73 » Fri, Sep 20, 2019, 11:57 AM UTC

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

Why can't they do any of those other things? Instead they pick my pocket using inflation. Fuckers.

My MM Fund was paying 2.4% for most of this year. Two rate cuts later it is 2.0% and falling. Is .4% really that big of a deal? Do they need ALL of my money? Look at the value of the dollar from 1913 (when the Fed came into being) to today and you see that it is worth a mere $.05 of what it was back then. We are being fucked over.

Also, I would like to buy another house and sell the one I own and generally do things that would increase money velocity, but I can't do any of that because I'm too fearful that I'm going to lose my job and that my savings will again be cut in half in some asinine banking fiasco like we had in 2008. It is sick what we do in this country and it makes me physically ill to even play a part in it. So when I say I pray for a "revolution" each day, I mean it. It doesn't have to be the violent kind, it just has to be the "come to Jesus" kind for the jack offs doing this fuckery.

Re: Why the Federal Reserve is pouring money into the financial system

#32

Post by o-__-o » Fri, Sep 20, 2019, 11:59 AM UTC

elSidCampeador wrote: post #27

whatok wrote: post #22

Earlier quoted context omitted.

Anything Zoltan on money markets is highly recommended. I think Bloomberg had him live at some event last night that was recorded.

Please share the link if you have it!

And spend the 30 seconds at least telling us what some event is in case others are possibly interested like OP suggests

Re: Why the Federal Reserve is pouring money into the financial system

#33

Post by thiago_fm » Fri, Sep 20, 2019, 12:15 PM UTC

They can always pump more money to the market in different ways, but what is clear that is happening there is a shift on the dollar not being the world currency / international trade currency.

FED will have always more trouble to handle that. What will happen is hard to say, maybe some crazy inflation, or liquidity crisis... or something I don't care about. What I care about is that economy and money will be broken for a while which will make people move away from the Dollar.

Re: Why the Federal Reserve is pouring money into the financial system

#34

Post by chosenbreed37 » Fri, Sep 20, 2019, 12:23 PM UTC

thiago_fm wrote: post #33

They can always pump more money to the market in different ways, but what is clear that is happening there is a shift on the dollar not being the world currency / international trade currency. FED will have always more trouble to handle that. What will happen is hard to say, maybe some crazy inflation, or liquidity crisis... or something I don't care about. What I care about is that economy and money will be broken f…

> What I care about is that economy and money will be broken for a while which will make people move away from the Dollar.

Why though?

Re: Why the Federal Reserve is pouring money into the financial system

#35

Post by yasp » Fri, Sep 20, 2019, 12:32 PM UTC

pishpash wrote: post #13

yasp wrote: post #4

How can reserves be too low when there are $1.4 T in excess reserves? How can repo rates spike to nearly 10% when the interest earned on those $1.4 T reserves only yields 1.80%? edit: more questions. As I understand it, the "repo market" is broader than only banks. Why is it that the Fed performing repo operations will alleviate the liquidity issue in the repo market, unless it is some such bank borrowing in the repo…

$1T of that is locked up in effectively mandatory reserves on account of regulations. https://www.stlouisfed.org/on-the-economy/2019/march/banks-d...

So the implication is that banks are hoarding excess reserves because they expect required reserves to be increased substantially in the future?

Regarding high quality liquid assets, wouldn't the collateral one would receive in a typical repo transaction qualify as such?

Re: Why the Federal Reserve is pouring money into the financial system

#36

Post by jhayward » Fri, Sep 20, 2019, 12:32 PM UTC

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

> If the fed were not providing this printed money to the banks

I'm pretty sure you don't actually mean "printed money", since the Federal Reserve doesn't do that. No currency was created for this market operation, just balances in books kept by the Federal Reserve Bank of New York.

Re: Why the Federal Reserve is pouring money into the financial system

#37

Post by freejulian85 » Fri, Sep 20, 2019, 12:37 PM UTC

jhayward wrote: post #36

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

> If the fed were not providing this printed money to the banks I'm pretty sure you don't actually mean "printed money", since the Federal Reserve doesn't do that. No currency was created for this market operation, just balances in books kept by the Federal Reserve Bank of New York.

The money which the fed gave to the banks did not previously exist. The fed increased the balance sheet of the banks to indicate they had cash they would not otherwise have had. Fits my definition of “printed.”

Re: Why the Federal Reserve is pouring money into the financial system

#38

Post by [deleted] » Fri, Sep 20, 2019, 12:38 PM UTC

jhayward wrote: post #36

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

> If the fed were not providing this printed money to the banks I'm pretty sure you don't actually mean "printed money", since the Federal Reserve doesn't do that. No currency was created for this market operation, just balances in books kept by the Federal Reserve Bank of New York.

[deleted]

Re: Why the Federal Reserve is pouring money into the financial system

#39

Post by zaphod420 » Fri, Sep 20, 2019, 12:38 PM UTC

jhayward wrote: post #36

freejulian85 wrote: post #30

The money absolutely impacts the economy and the individual. If the fed were not providing this printed money to the banks, the banks would need to do some combination of the following to increase liquidity: 1) Increase interest rates to attract new deposits 2) Sell assets — such as foreclosed homes now in the banks possession With house prices at all time highs and interest rates at all time lows, both 1&2 sound gre…

> If the fed were not providing this printed money to the banks I'm pretty sure you don't actually mean "printed money", since the Federal Reserve doesn't do that. No currency was created for this market operation, just balances in books kept by the Federal Reserve Bank of New York.

Here's a longer explanation for those interested...

https://www.thebalance.com/is-the-federal-reserve-printing-m...

Re: Why the Federal Reserve is pouring money into the financial system

#40

Post by thiago_fm » Fri, Sep 20, 2019, 12:45 PM UTC

chosenbreed37 wrote: post #34

thiago_fm wrote: post #33

They can always pump more money to the market in different ways, but what is clear that is happening there is a shift on the dollar not being the world currency / international trade currency. FED will have always more trouble to handle that. What will happen is hard to say, maybe some crazy inflation, or liquidity crisis... or something I don't care about. What I care about is that economy and money will be broken f…

> What I care about is that economy and money will be broken for a while which will make people move away from the Dollar. Why though?

Because if FED and US can't do a good job to keep their currency and country running properly, doing austerity when it is needed, not bailing out banks etc. Nobody will trust that currency anymore.

No country in the world can run a $1 trillion deficit or 5%(?) of their GDP every year and not have consequences. This might be "okay" now, but this will create an effect that when people finally start to move away from the dollar, things will run completely out of control in America.