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

351–360 of 450 posts

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

#351

Post by naasking »

thworp wrote: post #161
mo_42 wrote: post #89

Earlier quoted context omitted.

> 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.

You can only say that once you accept inflation to mean "a single number representing price increases", which is so over-simplified as to be laughable. Not to mention easily manipulated by statistical tricks and more obvious tricks like weighing for "feature increase" or using country-wide medians and not weighing those for population distribution. If you look at real estate prices vs CPI since MMT really began, real…

> If you look at real estate prices vs CPI since MMT really began, real estate grew much faster than CPI, in some cities over twice as fast. That is a direct result of all the excess money that wasn't needed for productive endeavours finding a "safe" place to be parked.

Seems like a post hoc ergo proctor hoc fallacy. There are plenty of safe investments that could also be productive, that doesn't say anything about why real estate specifically.

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

#352

Post by regpertom »

kriro wrote: post #176
misja111 wrote: post #130

Earlier quoted context omitted.

> 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…

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…

I thought the market knows best was kind of a joke. As in all your best reasoning and prayers, but it can still go against you, the market knew best. Is it in the same vein as a wizard being neither early or late, he arrives precisely when he means to (nothing’s ever priced incorrectly)? Or, like a loving mother who beats you (you didn’t properly factor in jupiter)? Depends how you’re feeling, but the market always knows best.

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

#353

Post by ceejayoz »

wccrawford wrote: post #197
actionablefiber wrote: post #39

Earlier quoted context omitted.

My savings account pays me 4% interest. You may want to shop around for a new bank.

Hold onto that account like it's gold. My bank's savings accounts are 0.01%. With a minimum of $10,000 it goes up to 0.05%. At 1 million dollars, it's 1.4%.

You can get one in like five minutes. All the major high-yield savings accounts are at 3-4% now.

4%: https://www.sofi.com/banking/savings-account/

3.75%: https://www.americanexpress.com/en-us/banking/online-savings...

None of them are fixed, they go up and down along with the Fed rate. "High-yield" was 1% a few years ago, but no one should be keeping substantial amounts in any savings account that only offers 0.01%.

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

#354

Post by _0w8t »

BurningFrog wrote: post #251
_0w8t wrote: post #191

Earlier quoted context omitted.

There is an observation that the real salaries stagnated since seventies for an average American because all the growth went into financial industries. Those rose in the last 50 years from few percents to close to a quarter of economy essentially resulting in a hidden tax paid by everyone to bankers.

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

Even if the standards improved, it came not from the financial industry and probably despite of it. When banking is 25% of economy, it is a heavy tax on everyone. The industry produces nothing and beyond few percents of economy as it was historically it brings just burden if not the outright harm.

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

#355

Post by Spooky23 »

polygamous_bat wrote: post #319
Spooky23 wrote: post #309

Earlier quoted context omitted.

SVB leveraged cozy relationships to attract business than they could handle. They ignored compliance and normal banking risks. They left their C level risk management position open and we’re not transparent about their fiscal health. Rate risk is a key feature to buying any bond, and it’s a risk that is manageable if management isn’t asleep at the switch. Nobody forced SVB to buy long duration bonds. Any investor wit…

> Blaming the government is a cop out. The job of finance professionals is to manage the assets in their custody responsibly. Somehow I feel that blaming the government is much more than a cop-out; it's a calculated position that enables the big players to continue privatizing the wins and socializing the losses. "Of course we are getting a bailout", the narrative goes, "cause it was the big government's fault all al…

Of course. Outside of academia and some law schools, there’s no real conservatives. These guys will cry and whine for bailouts, cash the check and start crying and whining about government meddling.

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

#356

Post by bluGill »

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.

People in the 1950s used to buy much smaller houses. Owning a small (13 inch) black and white TV used to be a big deal. A computer costs millions of dollars (not accounting for inflation!) and filled large buildings. Women often didn't get a drivers licenses at all, and even they did there was only one family car so they needed to drive their husband into work if they wanted to use the car. Cars needed a lot of maintenance for things like the points, and they didn't really last long unless you rebuilt the engine which most people did. You had one phone in your house and it was a party line shared with your neighbors.

In the 1970s houses were already getting larger, but not to today's. Nearly everyone had one 19 inch color TV, but few two. Only a few weird people had a computer in the house, and it connected to the TV for a monitor, for the rest a computer took up large buildings but many people had a terminal to use it via some time sharing system. Most women had a drivers license, but families only had one car unless the woman worked outside the house (which was most by this time). Cars with advances like electronic ignition cars need much less maintenance, but if your car was about to reach 100,000 miles you gathered your best friends to go for a drive to see it at all zeros: you had to add oil before you left (in a cloud a blue smoke), rebuilding engines was still common, but not something most people did. You had a private phone in your house.

Today most new houses are the size of what would have been considered upper middle class in the 1950s. Today people consider it normal to have a TV in every room. Today everybody has a computer in their home. Most families have a car per driver, and those cars often last 300,000 miles (though many people don't keep them that long). Everybody has a phone/computer in their pocket, few have them in the house at all.

There are a lot more things I could point out that have advanced. If you were willing to live like 1950 or 1970 you could get by on a lot less money.

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

#358

Post by BurningFrog »

mellavora wrote: post #349
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.

I fail to see how larger TV sets equates to huge increase in living standards. Maybe we could measure living standards by looking at mental health statistics? Percent of population on prescription mind-altering drugs? Do bigger houses, leading to greater social isolation, actually represent an increase in living standards? I get that bigger house == bigger house, but maybe the metric is flawed.

The Internet, and all other new technology the last 50 years is an enormous increase in living standards that's easy to forget.

Housing is a weird example, since that's actually been getting worse, due to housing construction largely being banned.

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

#359

Post by makomk »

zarzavat wrote: post #183
Dwolb wrote: post #169

Earlier quoted context omitted.

There’s interest rate risk, credit risk, and prepayment risk with the securities they buy. On a Treasury or guaranteed bond, there is no credit risk. On a Treasury there is no prepayment risk. Therefore if you hedge out the interest rate risk, you’re essentially left with 0 risk. 0 risk = 0 or near 0 premium. e.g. there’s no point in doing the trade if you hedge.

Yes that’s the point. Treasuries are cash, they are not meant to make money for banks, they are meant to be a place for banks to put money when they don’t have anything else to do with it. Banks are supposed to make money from the premium between the base interest rate and the rate on the loans they make. The implied contract when you deposit money in a bank is that the bank has a dependable business model as a lende…

The trouble is that other US government interventions also eliminated a big chunk of the "anything else to do with it". In particular, most mortgages in the US are fixed rate for the entire duration of their term through government backing, which almost entirely eliminates one of the big sectors of loans that banks in other countries can use to make money on the premium from interest payments with less duration mismatch than 10-year or 30-year bonds. In most other countries, mortgages are either variable rate or only fixed rate for a relatively short period. Also, a substantial proportion of all US mortgages in existence apparently locked in their interest rates during the time period in 2020 and 2021 when they were at record lows.

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

#360

Post by actionablefiber »

wccrawford wrote: post #197
actionablefiber wrote: post #39

Earlier quoted context omitted.

My savings account pays me 4% interest. You may want to shop around for a new bank.

Hold onto that account like it's gold. My bank's savings accounts are 0.01%. With a minimum of $10,000 it goes up to 0.05%. At 1 million dollars, it's 1.4%.

Get a new bank. Ally, SoFi, AmEx all pay upwards of 3.5% with no minimum.
Post reply on HN