U.S. interest rates have soared everywhere but savings accounts • Hacker News Board

Re: U.S. interest rates have soared everywhere but savings accounts

#211

Post by busterarm » Sat, Apr 23, 2022, 10:37 PM UTC

throw0101a wrote: post #68

azth wrote: post #40

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?

Have a diversified portfolio. Rational Reminder went over the data in "The Ultimate Inflation Hedge": > Is it possible to hedge your investments against different levels of inflation? This is the question we ask in today's episode, as we run through a variety of different investment approaches and commodities. While the answer may not come as a huge surprise, it is definitely worth the walk-through and getting to gri…

Also invest where you know/have an edge.

I've made judicious purchases in sealed Magic: The Gathering product. In just under 3 years, my initial 6-digit investment is up over 200%. Some purchases are wildly up and nothing so far has been a losing bet.

Other areas in collectibles I am also doing really well, like statues, classic cars, etc. Obviously a limiting factor is storage space.

I've lucked out due to some black swan type events but I can't see anywhere else where my investments are performing nearly as well.

Re: U.S. interest rates have soared everywhere but savings accounts

#212

Post by NaturalPhallacy » Sat, Apr 23, 2022, 10:47 PM UTC

jpgvm wrote: post #174

standardUser wrote: post #150

Earlier quoted context omitted.

Sounds like you're calling for a return to Glass–Steagall, which was repealed by a bipartisan vote under a Democratic president in 1999.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...

Some of it was re-instated with Dodd-Frank but ultimately I think it was insufficient, a return to Glass-Steagall would be a more ideal world for banking but will probably never happen in America as it stands today.

America will fall before the banks let the government regulate them in any meaningful way.

Re: U.S. interest rates have soared everywhere but savings accounts

#213

Post by imgabe » Sat, Apr 23, 2022, 10:48 PM UTC

azth wrote: post #40

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?

Monkey jpegs

Re: U.S. interest rates have soared everywhere but savings accounts

#214

Post by ThalesX » Sat, Apr 23, 2022, 10:48 PM UTC

WalterBright wrote: post #201

mise_en_place wrote: post #196

Earlier quoted context omitted.

My portfolio with foreign value stocks and gold and silver mining stocks, plus oil companies is doing great. I am up by more than 10%. This is just the beginning for them. My financial advisor who manages the vast majority of my wealth is down 2% in comparison. I'm close to pulling my money because he's extremely anti commodities and I had to yell at him to invest my money into mining companies because he thinks it's…

If you're telling your financial advisor what to invest in, what's the point in having one?

Probably to advise you and take care of the nitty gritty details of your decisions.

Re: U.S. interest rates have soared everywhere but savings accounts

#215

Post by twblalock » Sat, Apr 23, 2022, 10:52 PM UTC

victor106 wrote: post #79

So treasures yield 3%. Why can’t I just buy these bonds and get a 3% rate? What am I missing? https://www.cnbc.com/amp/2022/04/19/us-bonds-treasury-yields...

You'd be better off buying I-bonds if you want to prevent the money from shrinking. They are liquid after one year.

Your treasury bonds can lose value if newer bonds pay a higher interest rate. Your free 3% is only guaranteed if you hold the bonds to maturity. If you have to sell them before maturity for some reason, you could lose money overall.

Re: U.S. interest rates have soared everywhere but savings accounts

#216

Post by refurb » Sat, Apr 23, 2022, 11:02 PM UTC

hakfoo wrote: post #89

I always wondered why there was seemingly no (marketed) business in foreign savings accounts. If I'm willing to ride the exchange rate risks, surely there's some bank in Honduras paying a higher rate on Lempira-denominated accounts. Compared to half the derivative products on the market, it's a straightforward offering, and it also feels an ideal product for flim-flam direct-to-consumer marketing-- backed by "governm…

https://en.m.wikipedia.org/wiki/Interest_rate_parity

Over time any interest rate arbitrage is priced into exchange rates.

So yes, you can get 7% on Vietnamese Dong deposits, but the currency will likely lose 6% of value against the USD over the same time period.

Re: U.S. interest rates have soared everywhere but savings accounts

#217

Post by okaram » Sat, Apr 23, 2022, 11:15 PM UTC

azth wrote: post #40

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?

Yearly inflation seems to be going up mainly due to how it is calculated ... Monthly inflation seems to be going mostly sideways (although it has increased the last 3 months).

There's not (yet) been a market crash ... If you look back a month or a year, it's been mostly sideways too.

It may be the beginning of a horrible market crash ... But it may not ;). Trying to time the market, you're just as likely to lose as to win. Diversifying is always good; the stock market has usually provided the most growth long term. Unless you need the money soon, close your eyes and keep your money in the market.

Re: U.S. interest rates have soared everywhere but savings accounts

#218

Post by westurner » Sat, Apr 23, 2022, 11:18 PM UTC

headmelted wrote: post #152

clairity wrote: post #129

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…

You’ve just described the Glass-Steagall act. It has a long and storied history. It was created in response to the Great Depression, then repealed by the Gramm-Leach-Bliley act because money. Then the Dodd-Frank act tried to have it reinstated but failed, also because money. You may already be familiar with all of this but mentioning in case you’re not. ( https://en.m.wikipedia.org/wiki/Glass–Steagall_legislation ) T…

There was a separation between savings and investment banking between ~1933-1999.

Glass–Steagall in post-financial crisis reform debate: https://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_in_post...

(Edit: Monetary policy / Monetarism > Current State , Liquidity trap > Global financial crises of 2008 and 2020: https://en.wikipedia.org/wiki/Liquidity_trap )

How do microlending and DeFi rates democratize subsidized capital availability?

From IL-RFC-1 Interledger Architecture https://interledger.org/rfcs/0001-interledger-architecture/ :

> Settlement for one account MUST NOT depend on the status of any other accounts.

> If settlement of one account in the Interledger is contingent on the status of another account or relationship, this could create the threat of cascading risks and failures, similar to problems that occurred during the 2008 global financial crisis. Nodes can protect themselves from such risks by choosing to use settlement technologies such as collateralized payment channels where available. These types of arrangements can provide high-speed settlement without a risk that the other side may not pay. For more information on different ledger types and settlement strategies, see IL-RFC-22: Hashed Timelock Agreements.

> Nodes can also choose never to settle their obligations. This configuration may be useful when several nodes representing different pieces of software or devices are all owned by the same person or business, and all their traffic with the outside world goes through a single “home router” connector. This is the model of `moneyd`, one of the current implementations of Interledger.

Re: U.S. interest rates have soared everywhere but savings accounts

#219

Post by wallacoloo » Sat, Apr 23, 2022, 11:20 PM UTC

JumpCrisscross wrote: post #74

kobalsky wrote: post #62

Earlier quoted context omitted.

Bumping because I'm really interested in this answer. For me the obvious answer is, if the fed actions means it's more expensive to borrow now, then lend your money. The question is how and where. Bonds? Which bonds? TIPS don't seem to have a rate that would protect me from inflation. Gold? There's enough volatility there to lose more than 2 years worth of inflation with a badly timed entry, and I if I have to time m…

> TIPS don't seem to have a rate that would protect me from inflation The TIP yield is a real yield. It's indexed to CPI-U, same as Series I bonds. (TIPs adjust monthly; Series I bonds semiannually.) > would convert a some portion of my savings into stablecoins This is probably the worst choice one can make. It's accepting a 0% nominal yield against an unregulated counterparty. A Bank of America savings account is li…

> > would convert a some portion of my savings into stablecoins

> This is probably the worst choice one can make. It's accepting a 0% nominal yield against an unregulated counterparty. A Bank of America savings account is literally a better choice.

you clipped out half the sentence:

> I would convert a some portion of my savings into stablecoins and spread them out into some interest accounts to try to minimize counterparty risk.

interest accounts. i.e. non-0% nominal yields.

Re: U.S. interest rates have soared everywhere but savings accounts

#220

Post by mlyle » Sat, Apr 23, 2022, 11:22 PM UTC

prepend wrote: post #178

jVinc wrote: post #170

Earlier quoted context omitted.

> 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…

Thus the reference to a marketing error. 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.

> 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.

Right.. The bank can increase its level of leverage principally by:

* Decreasing loan interest rates to encourage people to take loans

* and/or decreasing savings interest rates to discourage people from keeping deposits.

Of course, real banks do both based on market conditions and capital requirements. And, of course, there's not an implausibly thin level of reserves like you imply to pedantically harass the prior commenter: you must have at least the required reserves, and certainly having way too much cash is toxic to profitability.