Earlier quoted context omitted.
2. is wrong, we had years of central banks money printing without inflation, recovery from Covid19 and the war are the reasons of this high inflation. Actually Fed real error has been raising rates to counter an inflation not caused by monetary policies. SVB put all their investments in one bucket and it has been a very poor decision, really a rookie one
This is false. Just look at amount of money pumped, it is easy to see the skyrocketing line in graphs. It is not the only but the main reason of inflation.
America’s banks are missing hundreds of billions of dollars
91–100 of 450 posts
Re: America’s banks are missing hundreds of billions of dollars
#92As someone with no real interest in finances, would it be fair to refer to something I've often heard: that economics is a jike - no-one really knows what they're doing, and all the theories (whether future, present, or past) count for zip [rather like "management"].
If something worked, they'd do it.
Re: America’s banks are missing hundreds of billions of dollars
#93Earlier quoted context omitted.
If capital is too risky to raise, why can’t a bank refuse deposits?
That would at the very least be unpopular with their customers, if not outright illegal. What would it look like to be a customer at a bank that did that? Especially for something like SVB - your startup closes its funding round, they wire the money to your bank account, and the bank refuses it?
SVB lobbied for a law that changed a crucial regulatory threshold from $50 billion to $250 billion. From ~2016 to ~2020 their assets jumped from $200 billion, with most of that happening from 2020 to 2022.
SVB was perfectly capable of restricting the total amount of assets it held. It wasn't a matter of rejecting small deposits; it was a matter of allowing (or rather, soliciting) huge clients to open new accounts to hold hundreds of millions or billions in assets.
Re: America’s banks are missing hundreds of billions of dollars
#94What a mess. The Fed has effectively made the United States into a socialist banana republic. As oligarchs will only trust the government, rather than private enterprises, to be their counterparty when banking.
Re: America’s banks are missing hundreds of billions of dollars
#95Earlier quoted context omitted.
You don't need a direct financial kickback to define corruption. From: https://www.cnbc.com/2023/03/16/svb-signature-bank-failures-... > Treasury Secretary Janet Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system.
If you’re too big to fail, you’re too big to exist. We should either let them fail (my preference, despite the pain) or bail them all out. But I also think that if we’re going to insist that there is a private entity that is too big to fail, it should be broken up until the pieces are not too big to fail.
Or it shouldn't be a private entity.
Re: America’s banks are missing hundreds of billions of dollars
#96Earlier quoted context omitted.
This is a wrong characterization and makes it look like it's the Fed fault all along. Government bonds still have risks (ie: The government not paying) but more importantly, they are tightly linked to the main interest rate. Their prices can fluctuate significantly and do all the time. Bankers know that. That's kind of the first or second lesson they'd teach you at a basic financial course. Everything is priced in te…
"The upside of MMT and 0% interest rates is that it allows a whole set of businesses to become viable. Businesses with a 1% yield are not viable with a high interest rate as it makes more sense to just buy bonds. People who can generate yield will thrive, since the expected market yield is zero. It's still a question whether this will benefit mainstream; or a bunch of tech companies that have a monopoly of tech and i…
It's almost like we should be optimising people getting stuff for creating actual value.
Re: America’s banks are missing hundreds of billions of dollars
#971. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…
> 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. Printing money doesn’t cause inflation necessarily. Your thinking is based on Monetarism, which has been debunked a while ago. In essence, it’s not about the amount of money that is created. It's about the amount of goods we try to consume in relation to the amount of goods produced.
There's a pretty excellent and rather indie board game called "Wealth of Nations". If you squint, it's a bit like what you wish Catan was, after you've played Catan for awhile.
Players make resources, then re-invest those resources to expand. There's markets to buy and sell resources, and otherwise money isn't part of the game... until someone makes banks, and starts printing money. At which point everyone watches the prices of everything go up.
It's a pretty cool microcosm.
Re: America’s banks are missing hundreds of billions of dollars
#981. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…
1. Why is cash parked at the Fed not an option?
The U.S. is a capitalist system. In a capitalist system, the function of a bank is to convert savings to investments, without the government deciding which investments to make. That function must be served in both good times and, especially, bad times. Providing a risk-free place to park your money disincentives investments, especially at those times when capitalists are supposed to earn their keep--discovering ways to improve productivity when it's most difficult to find those opportunities.
That's the background context. The way it plays out is more technical. See, e.g., Matt Levine's discussion of so-called narrow banking: https://www.bloomberg.com/opinion/articles/2018-09-06/fed-re... Narrow banking is the option you're implying--permitting banks to simply be conduits to park deposits with the Fed.
Re: America’s banks are missing hundreds of billions of dollars
#991. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…
2. is wrong, we had years of central banks money printing without inflation, recovery from Covid19 and the war are the reasons of this high inflation. Actually Fed real error has been raising rates to counter an inflation not caused by monetary policies. SVB put all their investments in one bucket and it has been a very poor decision, really a rookie one
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Re: America’s banks are missing hundreds of billions of dollars
#1001. The government requires banks buy their debt and hold it as reserves because it's considered the safest investment. 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. 3. New treasuries yield 4 or 5 times as much in interest as the ones from 1-2 years ago. Why would anyone want to buy those old treasuries near face value now? 4. The…
Two words … bond ladder. Stagger maturities to meet reasonably expected distributions and interest rate trends. Basic financial management 101.