111–120 of 182 posts
Earlier quoted context omitted.
Q. How many US Presidencies have "operating close to the debt ceiling" and needed an "act of Congress" to continue on.. factual answers please, partisans
The chart from 1940 to 2018 makes it look like the answer is "most of them." https://www.crfb.org/sites/default/files/DebtCeilingChart.JP...
This event doesn't make sense if you have assumed that banks take deposits and then loan that deposit money out. In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! Cash might seem like an asset. But in reality the loan is the asset that pays the bank money and cash is the liability because the cash can be w…
> In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! That's not how fractional reserve banking works. If I deposit $100 in a bank, they're not allowed to lend out $1000. In fact given a 10% cash reserve ratio, the limit is actually $90. The other $10 has to stay at the bank "in reserve", at least in theory.…
It really helps to have a look at the graph: https://fred.stlouisfed.org/series/RRPONTSYD This is clearly the highest level of reverse repo since the program was introduced, by a wide margin. There are three factors behind this: 1. The Treasury has temporarily backed off issuance of short term debt as it drains down an overflowing General Account. https://www.reuters.com/article/us-usa-treasury-liquidity-ex... 2. Ban…
Earlier quoted context omitted.
No, but you can get a ~3.5% 30 year fixed mortgage for the same reason.
And if the inflation hawks are right, that's a great deal - the capital you owe, and the interest you need to pay, will vanish within a couple of years and you'll still own the house. Banks clearly don't think there's much risk of long term high inflation.
Your debt is liquified but your house value also goes into the crapper.
This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.
Although you're being downvoted, this is a growing sentiment among researchers and others near the field. There are calls to improve measurements of a society's wealth, as well as individual. Current headlines use the broad statistics, such as the most exclusive unemployment stats, that don't really capture what's happening on Main Street. The reporting on the economy barely pokes at issues and are generally just loo…
You probably know this, but just to clarify economics has many more complicated statistics than those that make it into newspaper headlines. For example, the "unemployment number" is technically U1. U2, U3, U4, etc. capture different nuances.
It really helps to have a look at the graph: https://fred.stlouisfed.org/series/RRPONTSYD This is clearly the highest level of reverse repo since the program was introduced, by a wide margin. There are three factors behind this: 1. The Treasury has temporarily backed off issuance of short term debt as it drains down an overflowing General Account. https://www.reuters.com/article/us-usa-treasury-liquidity-ex... 2. Ban…
Reverse repo is when the Fed loans treasuries to banks, typically at very low rate and no more than one day. This avoids the need for the Fed to sell its short term treasuries on the open market.
i wonder what us the root cause? or in economics, i guess its never so straightforwards...?
It really helps to have a look at the graph: https://fred.stlouisfed.org/series/RRPONTSYD This is clearly the highest level of reverse repo since the program was introduced, by a wide margin. There are three factors behind this: 1. The Treasury has temporarily backed off issuance of short term debt as it drains down an overflowing General Account. https://www.reuters.com/article/us-usa-treasury-liquidity-ex... 2. Ban…
Since the Fed owns so much of its own debt, couldn’t it just decide not to repay itself the principal when those treasuries mature?
The Fed(eral Reserve) and the federal government are not the same thing. The forming owning debt of the latter isn’t owning its own debt.
This event doesn't make sense if you have assumed that banks take deposits and then loan that deposit money out. In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! Cash might seem like an asset. But in reality the loan is the asset that pays the bank money and cash is the liability because the cash can be w…
This is the clearest overview of the process I've ever come across, and it's from the Bank of England who should know how :)
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
There's another one covering money more generally as well.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
This event doesn't make sense if you have assumed that banks take deposits and then loan that deposit money out. In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! Cash might seem like an asset. But in reality the loan is the asset that pays the bank money and cash is the liability because the cash can be w…
> In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! That's not how fractional reserve banking works. If I deposit $100 in a bank, they're not allowed to lend out $1000. In fact given a 10% cash reserve ratio, the limit is actually $90. The other $10 has to stay at the bank "in reserve", at least in theory.…
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...