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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

#141

Post by pixelfarmer »

mo_42 wrote: post #89
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…

> 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.

Exactly. It can also easily be seen via stock indices, the likes of S&P 500 and similar. The general curve is "exponentially upwards", which implies that someone somewhere must make money available in the very same fashion. Now, looking at fiat money I think it is clear how that comes to be, but that also means that all this fake money -- technically massive amounts of debt piled on debt, plus interest on all of it -- is aplenty.

As you wrote, it was the hickups in the actual economy which caused the price hike, and with all that "money" available it was also clear that this inflation wouldn't go down anytime soon as so called "experts" were talking about initially. In fact, it is a wonderful dumping ground for all this junk in the stock market, although by now it is more of a trickle in relation to the amounts piled up there ...

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

#142

Post by theteapot »

nugget wrote: post #61
harry8 wrote: post #56

Earlier quoted context omitted.

> Wrong. This is corruption. Janet is picking winners and losers. Some people are losing their deposits and some are not. You are systemic if you had dinner with Janet yesterday. Big call. Huge. Got some data or similar to back it? Edit: If there's clear picking of winners, or even plausibly so it's gonna look pretty bad. [1] [1] https://www.theguardian.com/business/2021/jan/01/janet-yelle...

Watch the exchange between Sen Lankford and Sec Yellen yourself: https://www.youtube.com/watch?v=Bcvl104tyRY Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own. It's one of the most incredible moments I've witnessed. I'm not sure if there's some hidden agenda being pursued, or if Yellen is just so far removed from the real world that she doesn't under…

> Yellen says unsecured depositors at TBTF banks will always be bailed out, but those at smaller banks are on their own.

I agree SVB and Signature uninsured deposits shouldn't have been guaranteed, but that's not quite what Yellen said. The $250K guarantee applies to deposits at all insured banks. Having clarified that, Yellen said:

> A bank only gets that treatment [guaranteeing all deposits] if a [super] majority of the FDIC, a super majority of the FED board, and I in consultation with the president determine that the failure to protect uninsured depositors would create a systemic risk and significant economic and and financial consequences ...

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

#143

Post by SturgeonsLaw »

di456 wrote: post #118
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.

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.

> Banking is basically nationalized now.

More like government is privatized

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

#144

Post by moremetadata »

csomar wrote: post #53
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…

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…

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

#145

Post by mschuster91 »

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…

> 2. The government decides that, oops, it printed too much money in 2020/21 and is causing inflation, so it raises rates very quickly.

The cause of the inflation is not a classic spiral, it's profiteering especially on the side of fossil fuel producers and in retail.

> 5. A bunch of VCs decide they'd like their money back today, not in 20 years. A bank doesn't have it on hand, so it goes under.

It's not "a bunch of VCs", it's "GQP-allied Peter Thiel wants to see the world burn just to create additional mess for the Biden gov't and causes a bank run". The SVB crisis only picked up speed when Thiel advised all his startups to pull out their money, thus causing the bank run.

> SVB is certainly not blameless here, but the Fed's money printer and the government's wildly excessive stimulus has to be one of the worst policy errors since the 2007/08 financial crisis.

Without the "excessive" stimulus packages, economies across the Western nations would have been devastated by Covid. It was bad enough with the stimulus packages, I don't even want to imagine how it would have turned out without them.

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

#146

Post by andirk »

mise_en_place wrote: post #94

What 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.

Private enterprises are plenty responsible for this situation and similar past situations. Ironically (is it ironic I don't know), SVB got in trouble _because_ of the regulations. Time will tell if that dang govment got ahead of the situation early enough.

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

#147

Post by censor_me »

albertopv wrote: post #91
aaa_aaa wrote: post #76

Earlier quoted context omitted.

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.

Nope https://en.wikipedia.org/wiki/2021%E2%80%932023_inflation_su...

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

#148

Post by dsomers »

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…

> 4. The old treasuries decline 30-40% in present value. Oops, they're not so safe after all if you need your money back before maturity, which is often decades away.

This is because they fucked up their duration risk handling, no one held a gun to SVBs head and forced them to invest so heavily in long duration bonds. If they bought more short duration bonds none of this would be a problem. Other banks didn’t make this mistake. So why did they do it? Greed, or who knows, maybe it was plain old ignorance/hubris. Still, it was 100% avoidable. SVB fucked up bad and pointing blame at the fed is just not making them accountable.

Like fuck, who are these dumb chimps running this place. When I help my parents plan their retirement I looked at 100 years of history of what normal fluctuations are in the bond or stock market. Looking up data like that takes an hour and should make anyone with basic math skills realize rate and the bond fluctuations that follow at 100% bound to happen given enough time. It was just absolute amateur hour at SVB.

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

#149

Post by pash »

kgwgk wrote: post #105
pash wrote: post #70

Earlier quoted context omitted.

Money-market accounts are not covered by government deposit insurance. But money-market funds make a return for themselves by investing their customers’ cash in risky assets, similarly to a bank. If there’s a run on your money-market fund akin to the bank runs we’ve recently seen, the FDIC isn’t going to save you. (Kinda. The other big distinction between a bank and a money-market fund is that the latter don’t indulg…

> the Treasury stepped in to make investors whole. Not really: https://en.wikipedia.org/wiki/Reserve_Primary_Fund#Failure

Yes, really. The Treasury guaranteed dollar-for-dollar redemptions for all investors’ holdings at the time the RPF broke the buck, following Lehman’s failure several days before [0, 1]. Only those who speculated on the value of the fund after that time lost money, and very little.

0. https://home.treasury.gov/news/press-releases/hp1161

1. https://elischolar.library.yale.edu/cgi/viewcontent.cgi?arti...

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

#150

Post by Aunche »

somenameforme wrote: post #102
albertopv wrote: post #60

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

Here [1] is a graph of inflation. We've had increasingly accelerating inflation, especially since 1971 [2]. That's the end of Bretton Woods, or the date that the USD became completely unbacked by anything - enabling the freedom to arbitrarily "print" money. In more recent times, even more rapidly accelerating inflation began in July 2020, shortly following the $2.2 trillion CARES act from late March 2020. The "transi…

>Here [1] is a graph of inflation. We've had increasingly accelerating inflation, especially since 1971 [2]. That's the end of Bretton Woods, or the date that the USD became completely unbacked by anything - enabling the freedom to arbitrarily "print" money.

You have it backwards. Ending Bretton Woods didn't cause inflation. Inflation caused the end of Bretton Woods. If you zoom into the period before 1971, you still see plenty of inflation. If the government wants to stop its deficit that forces it to "print money", it needs to stop its deficit. Forcing the government to give a fixed quantity of a shiny yellow metal in exchange for a green piece of paper isn't going to help with that. All that does is ensure that the government will instantly give up all of its shiny yellow metals.

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