Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

America’s banks are missing hundreds of billions of dollars

economist.com

Post reply on HN
Print view View original

331–340 of 450 posts

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

#331

Post by bluGill »

misja111 wrote: post #184
kriro wrote: post #176

Earlier quoted context omitted.

If the market always knows best then why do I need traders except for market making purposes? Shouldn't everyone just buy the lowest cost passive ETF of a big enough index like S&P 500 then? I think "the market always knows best" is correct in most cases and if you think you know better you are probably wrong but there are empirical counterexamples like the Buffets of the world (unless one would claim that his gains…

> Shouldn't everyone just buy the lowest cost passive ETF of a big enough index like S&P 500 then? Yes, this is very best the advise to invest your money (except if your name is Warren Buffet). Buy it and hold it. There have been so many papers published that show this. You cannot predict the market, what you can do is save yourself some risk and some transaction costs. Any investment advisor that tells you different…

If everyone invested in index funds, then there would be a lot of money to be made from you alone looking at the market. There are often companies that announce some new product that will (at least for a few years) outsell their competition. Index fund have no way to know that the company will thus be worth more money than their competition, but you do.

The problem is the above is similar to a zero sum game in that there is a fixed total profit to be made in that way, and that money is shared between everyone who is correct (including index funds!). Since there are a lot of people trying to make the above trades the total profit you can make is reduced as they have already moved the price above what a pure index fund market would have it at. (a true zero sum game every winner is paired with a loser, while the above doesn't actually have losers in the same way, but I don't know any other way to explain it)

I concluded long ago that if I made studying the market my full time job and hobby I could make a good income doing it. However reading all the reports is boring, while writing code is fun, so I just invest in index funds.

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

#332

Post by scotty79 »

samus wrote: post #277
DSingularity wrote: post #167

Earlier quoted context omitted.

Finally! People calling it what it is. Corruption. And the domestic angle isn’t even the worst. Breton-Woods put America in a sort of custodianship which they have betrayed. Raising and lowering rates to promote your domestic economy without even considering the global impact is fucked up if you promised the world that your currency can serve as a trusted foundation. World order is still fluctuating all as a result o…

Bretton-Woods is history. Since the Nixon Shock, the USD isn't the global reserve currency anymore. It's still influential, but only because of the giant domestic market in the USA and its status as the only global superpower.

USA wouldn't be able to run at trade deficit for decades if it didn't literally print money for the rest of the global economy.

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

#333

Post by Loughla »

DSingularity wrote: post #167
csomar wrote: post #53

Earlier 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…

Finally! People calling it what it is. Corruption. And the domestic angle isn’t even the worst. Breton-Woods put America in a sort of custodianship which they have betrayed. Raising and lowering rates to promote your domestic economy without even considering the global impact is fucked up if you promised the world that your currency can serve as a trusted foundation. World order is still fluctuating all as a result o…

>Raising and lowering rates to promote your domestic economy without even considering the global impact

This is an honest question, that may be naive. But, what are institutions formed, founded, and ran inside of the US, overseeing the US government and policy, supposed to do instead of considering what is best for their own country?

Are you arguing that, because the world chose the US dollar as its de-facto global currency, that the US is obligated to consider the entire world first, instead of its own citizens?

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

#334

Post by chippiewill »

sanp wrote: post #189

The title is clickbaity. It's not like the banks are missing any of their depositors' money.

Well strictly speaking virtually no bank has all of their depositors' money, otherwise they'd struggle to turn a profit.

What you're saying is that the valuation of their assets at maturation (or at market for non-maturing assets) exceed their current liabilities which should be true across the board.

No large bank could pay out 50% of their deposits in a single day without becoming insolvent. And even if they could fully liquidate they couldn't all cover their liabilities at current market value.

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

#335

Post by AnimalMuppet »

baremetal wrote: post #263
BurningFrog wrote: post #251

Earlier quoted context omitted.

Those calculations are very tricky in conflict with the obvious huge increase in living standards since the 70s.

>Those calculations are very tricky in conflict with the obvious huge increase in living standards since the 70s. People used to be able to buy a house and raise a family on one salary. Tell me where exactly the standard of living went up since the 70s. Sounds nice though.

Well, let's see.

That family with one salary probably also only had one car. That car needed a tune-up regularly, and was lucky to make it to 100,000 miles.

They had a house, but it was a small house by current standards - maybe 1000 square feet.

They had one landline phone - no cell phones, and certainly no computers.

The breadwinner could retire at 65, but the median age of death was 68. They could afford medical care, but the medical care that was available didn't lengthen their lives to what we expect today.

So that's where it went - bigger houses, more cars, computers and cell phones, and better medical care. But if you're willing to live in a 1000 square foot house, only have one car, no computers or cell phones, and inadequate (by current standards) medical care, you can probably raise a family on one income still today.

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

#336

Post by AnimalMuppet »

prennert wrote: post #126
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…

There is a concept in the armed forces for making decisions in a given timeframe (struggling to find a source for this). Essentially you do the best you can in the time you are given. Then you move on and iterate. If you dither too much you probably don't have to make a decision anymore as the enemy has made it for you. In that framework it is accepted that a solution is not perfect. I think about these crises the sa…

Why did they only have 48 hours to make a decision? Because the banks (and the financial markets) were going to re-open on Monday morning.

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

#337

Post by naasking »

makomk wrote: post #179
groestl wrote: post #133

Earlier quoted context omitted.

> I am wondering what the alternative was? When an economy stops producing services and goods, somebody is going to need to reduce their consumption of said goods eventually. The question is just, who that is. Another poster above mentioned three ways a government can balance their budget: spending less, raising more, decreasing real value of debt by inflation. Each of those has a target "audience", which suffers the…

The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it wasn't for the evil profiteering corporations and the mega-rich stealing from them. They've done things like point to the increase in wealth of the super-rich "during the pandemic" to prove that ordinary people have become poorer because the money they deserve wa…

> The trouble is that a large chunk of the media has basically lied about this and told people that no, they'd be able to consume just as much as before if it wasn't for the evil profiteering corporations and the mega-rich stealing from them

Not a lie at all, corporate profits are the largest driving factor behind inflation over the past couple of years:

https://www.epi.org/blog/corporate-profits-have-contributed-...

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

#340

Post by shagie »

misja111 wrote: post #130
csomar wrote: post #53

Earlier 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…

> I honestly was thinking we will stay in this zero-rate regime for the next decade or more. I suspect the people at SVB thought in a similar fashion and plan accordingly I have been working in several trading companies, both as trader and in IT, and the first thing they teach you when trading, is that the market always knows better than you. So hedge your risks and don't trust that you have some kind of vision that…

Their exuberance at the state of the economy in 2020 and early 2021 can be seen in their interview with Bloomberg. They expected the growth of tech to continue to grow at the rate that it did with the start of the pandemic and that that was going to be stable afterwards.

https://www.bloomberg.com/news/videos/2021-05-20/innovation-...

Post reply on HN