171–180 of 356 posts
Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need margin and they can keep them low cuz people won't swap banks for half a percent (not that it'll get there anytime soon)
The yield on the 1 year t-bill has gone from 0% to 2% That’s where I’ll be keeping cash I’d otherwise keep at the bank, for now.
The issue is that there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash. Banks make money by lending money out, in times where banks are strapped for cash on hand, you will see interest rates increase. I don’t see this changing in the near future.
Banks don’t lend money out. Never have, never will. Banks are discount houses. They create their own money against financial assets they buy from you with that money. They are factories, not warehouses. Deposit interest rates aren’t going up because there’s nowhere else the money can go. Nobody wants be the retail to wholesale middleman at present.
Serious question: inflation seems to only be getting higher (is it 8%+ now?) the Fed's increasing of the interest rate is causing a stock market crash. So if one puts their money into assets, those are decreasing in price due to the fed, and if someone is holding cash that's also going down in value due to inflation. What's the solution?
> Fed's increasing of the interest rate is causing a stock market crash. Citation needed. Rate hikes were announced mid-march and I don't think you can even find that info on this chart https://finance.yahoo.com/quote/%5EDJI/ If we do see a crash soon I think it will likely be more related to major tech stocks failing to perform as expected. Of the original FAANG, F and N have both had days where there value dropped…
https://files.catbox.moe/cs4gtg.png
https://www.cmegroup.com/trading/interest-rates/countdown-to...
Earlier quoted context omitted.
> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…
Sounds like you're calling for a return to Glass–Steagall, which was repealed by a bipartisan vote under a Democratic president in 1999. https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_legisla...
Earlier quoted context omitted.
Ah thanks for the clarification! Have a link to a good explanation of the limitations?
I just poked around the Treasury site. It's a maze of little corridors all alike, but this one has some relevant info: https://www.treasurydirect.gov/indiv/planning/plan_education...
Unfortunately, not that high:
You may be able to cash in qualified U.S. savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions.
- You pay qualified education expenses for yourself, your spouse, or a dependent.
- Your MAGI is less than $98,200 ($154,800 if married filing jointly).
- Your filing status isn't married filing separately.
Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.
Some banks actually offer loans with negative interest: https://amp.theguardian.com/money/2019/aug/13/danish-bank-la... (there are other examples)
Earlier quoted context omitted.
> "...there is no incentive for banks to increase interest rates on accounts as they are already sitting on too much cash." and folks wonder why banks are so strictly regulated... no, banks are never sitting on too much cash unless they've made a marketing and/or an operational error. most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". q…
> most banks are highly levered, meaning they're lending out, say, 10× the cash they hold, so they never "have too much cash on hand". Reconsider what your stating here. If I have 10$, and I can therefore lend out 100$, but I only have requests to borrow 50$, then I have "too much cash". If I however had requests to borrow 200$, the I would need to find another 10$, for instance by promising someone a higher interest…
Banks that have too much cash on hand go out of business. If a bank ends up being near this it just reduces its loan rates and loans the money out for slightly less, but still better than sitting on cash.
Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.
Real interest rates are still negative, with inflation being at 9%. So even if the yield is 3%, on the 5 year treasury, the real yield is -6%. What fool would lend someone 100 dollars to get back 94 dollars in 5 years? The biggest sucker is the person who owns a 30 year treasury, and if the Fed starts selling its treasuries, good luck getting a reasonable price for it.
