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America’s banks are missing hundreds of billions of dollars

economist.com

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Re: America’s banks are missing hundreds of billions of dollars

#111

Post by cudgy »

pauljurczak wrote: post #62
nostromo wrote: post #31

1. 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…

> it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly. It printed too much money in 2008 and the following years. It raises rates very quickly now, because each time Fed tried to raise the interest rates or reduce their balance sheet after 2008, the political pressure made them backtrack. This Frontline documentary has a pretty good take on it: https://youtu.be/EpMLAQbSYAw .

> the political pressure made them backtrack

Wasn’t the fed created to some extent to prevent political will from whipsawing the credit markets? How did the politicians force the fed? Isn’t this expected? The fed did it to themselves.

Re: America’s banks are missing hundreds of billions of dollars

#113

Post by cudgy »

thejackgoode wrote: post #108
cronix wrote: post #58

Earlier quoted context omitted.

the rate at which they rise (or fall) is a big factor

that's why it's hard to deal with stagflation quickly

All the more reason not to lower them to unreasonably low levels in the first place.

Re: America’s banks are missing hundreds of billions of dollars

#114

Post by throwawaaarrgh »

InCityDreams wrote: post #92

As 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.

If something worked, they sure as hell wouldn't tell us, because then they couldn't take advantage of it

Re: America’s banks are missing hundreds of billions of dollars

#115

Post by hgomersall »

jonkho wrote: post #101
1vuio0pswjnm7 wrote: post #78

Earlier quoted context omitted.

"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…

That would have to be a 1% real yield on top on the massive XX% inflation the free money would cause! So XX + 1% would be the nominal yield to make it a viable business.

No, that's the point. Liquidity should be readily available, so you create 1% on as much as you can.

Re: America’s banks are missing hundreds of billions of dollars

#116

Post by robertlagrant »

piva00 wrote: post #95
christophilus wrote: post #80

Earlier quoted context omitted.

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.

Better a private entity that needs bailing out with taxpayer money than one that is normally funded by taxpayers.

Re: America’s banks are missing hundreds of billions of dollars

#117

Post by tigershark »

nostromo wrote: post #31

1. 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…

Your view of the story is completely flawed. Your first point is false. There is no regulation that forces banks to buy long term government bonds. There is some regulation that forces them to have a certain percentage of capital tier 1 to safeguard themselves from bank runs, but it was repealed in 2018 by trump for “regional” banks and SVB CEO lobbied strongly for it for years and was ecstatic when it finally happened: https://www.theguardian.com/business/2023/mar/11/silicon-val... .

Re: America’s banks are missing hundreds of billions of dollars

#118

Post by di456 »

christophilus wrote: post #80
csomar wrote: post #59

Earlier 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.

Banking is basically nationalized now.

The government outsourced this responsibility to the Federal Reserve at the same time that a federal income tax began.

There are 3 main ways to balance a government budget. Spend less, raise more funds through taxes, or make the scale of debt decrease through inflation.

Re: America’s banks are missing hundreds of billions of dollars

#119

Post by jquery »

skellington wrote: post #109
somenameforme wrote: post #87

Earlier quoted context omitted.

I never understand things like this. She looks like a deer caught in the headlights when he asks her the most predictable and basic question about her decisions. How can you be in such a position, make such decisions, and be unable to offer a compelling answer to the most basic questions? Even if it some sort of a hidden agenda and [further] centralizing banking is just seen as a convenient stepping stone towards CBD…

[flagged]

>Probably a Republican president would be just as bad

Yes we all know the previous President famously kept his family far away from the levers of power.

Re: America’s banks are missing hundreds of billions of dollars

#120

Post by hgomersall »

wahern wrote: post #98
7e wrote: post #40

Earlier quoted context omitted.

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…

What? No, the purpose of a bank is to make loans to loan worthy entities, for which they should receive adequate recompense reflecting the risk of default. Investments don't come into it. It's only in recent years that banks started doing investment, and arguably that's a big part of the problem.
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