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Federal Reserve lent $300B in emergency funds to banks in the past week

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Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#161

Post by onlyrealcuzzo »

almog wrote: post #32
almost_usual wrote: post #6

Earlier quoted context omitted.

It’s a loan, not QE. QE is no strings attached money injected into the market. QT is still ongoing as of last week, however, I don’t see it lasting. I do think a .25 rate hike will still happen.

It's a loan whose collateral is taken at par value rather than market price, which essentially increase the Fed's balance sheet. As of Wednesday last week, 4 months of QT have been reverted in a single week: https://fred.stlouisfed.org/series/WALCL

It's a loan like PPP was a loan.

Sure, technically, but substantially different from how loans usually work...

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#162

Post by cycomanic »

arcticbull wrote: post #104
prasadjoglekar wrote: post #55

Earlier quoted context omitted.

Inflation was there all along in asset prices - why else have home values gone up disproportionately relative to average Joe's income? What the Fed is doing with this move is patching the balloon and preventing a deflation. That is, bank has a run on deposits because people want their money back; bank is out of liquid cash; bank sells bonds/MBS that have mark-to-market less than par thus realizing losses. The downstr…

An increase in asset prices is not inflation, it's a good investment. AAPL isn't in the CPI basket, Apples are. Homes are up in price because zoning rules preclude development of new houses sufficient to meet demand, creating an imbalance in supply vs. demand. Interest rates only shift that equilibrium. Concretely, Japan's monetary and interest rate policy has been almost the same as the US for decades however they h…

The zoning effects are US specific, why then have house prices increased in pretty most all western countries, also they can't explain the huge jump in housing prices during covid.

The whole zoning discussion ignores the fact that investing in housing became hugely popular in the last decade, largely due to monetary policy as well as faverable tax policies.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#163

Post by jaggederest »

bozhark wrote: post #11
paxys wrote: post #7

I assume banks went ahead and bought subprime mortgage bonds with that $300B. And at this point why not? Everyone knows that the government will print an unlimited amount of money to keep the system going no matter what risks you take and how careless you are.

subprime auto loan defaults in first wave

Commercial real estate lending has to be pretty shaky too with the change in occupancy levels of offices since 2020.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#164

Post by cipheredStones »

iancmceachern wrote: post #157
iancmceachern wrote: post #156

I think what we're learning from all this is that the people we trust with our money, the "financial sector", can't be trusted with our money

To whomever downvoted this - what happened at SVB and Credit Suisse was confidence inspiring? Trust building?

You're not being downvoted because people trust banks; you're being downvoted because commenting "you can't trust the banks" doesn't add anything interesting to the discussion, it's just a bare statement of a common opinion.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#165

Post by zeroonetwothree »

hedora wrote: post #124
nimbius wrote: post #107

Earlier quoted context omitted.

Suspending educational loan payments is tapping the brakes on what is largely a trillion dollars of absolutely unsustainable debt Joe biden himself lobbied for and now lives in constant low key fear of. Stimulus checks were a feature of George w bush's presidency too during the great collapse of 2008. The past 13 years of qe put so much cash into the supply side that inflation was inevitable as all the governors for…

I still don’t understand why student loans are not forgivable during bankruptcy proceedings. It is a recent change, and pretty clearly in violation of the thirteenth amendment: “Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.” since there are legal implication…

Because if they were no one would give out student loans.

Also it’s pretty offensive to equate paying back debt to indentured servitude.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#166

Post by zeroonetwothree »

mrcode007 wrote: post #125
7speter wrote: post #121

Earlier quoted context omitted.

Egg prices are up mostly because of a shortage caused by avian flu.

You’re not even close to being right. https://modernfarmer.com/2023/01/record-breaking-egg-profits...

Sounds like an unbiased and reliable source

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#167

Post by mrcode007 »

zeroonetwothree wrote: post #166
mrcode007 wrote: post #125

Earlier quoted context omitted.

You’re not even close to being right. https://modernfarmer.com/2023/01/record-breaking-egg-profits...

Sounds like an unbiased and reliable source

https://www.ft.com/content/151cb429-d024-4d5c-9edf-5b4a2b104...

How about this one ?

https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1...

As unbiased as it can be. Hopefully you can stomach the direct quotes from the companies themselves.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#168

Post by light_hue_1 »

fosk wrote: post #45
almog wrote: post #32

Earlier quoted context omitted.

It's a loan whose collateral is taken at par value rather than market price, which essentially increase the Fed's balance sheet. As of Wednesday last week, 4 months of QT have been reverted in a single week: https://fred.stlouisfed.org/series/WALCL

As long as the regular Joe doesn’t get extra money to spend, inflation will be check. Banks won’t go buy eggs anytime soon. We had close to 0% interest rates for almost a decade, and inflation was in check. It’s not the Fed that caused inflation, it is: * Suspending school debt (extra income) * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses) * Supply chain bottlenecks after Co…

This doesn't even pass the smell test.

> It’s not the Fed that caused inflation, it is: > > * Suspending school debt (extra income)

School debt repayments are about $100B per year ($0.1T).

> * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses)

$800B in stimulus checks. PPP was about $800B as well. So we're talking $1.6T over 3 years, $0.5T/year.

The US economy is $23T. Let's put $0.5T/year in perspective: social security payments are now $1.3T/year and defense spending is $0.8T/year.

You're trying to argue that a 2% GDP increase in spending is the main cause of significant inflation? That's nonsense.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#169

Post by fosk »

lumost wrote: post #160
fosk wrote: post #133

Earlier quoted context omitted.

> Increasing wealth inequality has tangible negative effects on the economy and effectively functions as a reverse tax. I am not sure I understand what you are trying to say. Inflation either spikes up because of increased of demand, or lack of supply. In our case, both have happened: * Increased demand because free money is hitting the bank accounts of almost everyone. * Decreased supply because of supply chain bott…

My argument is that the last 13 years of low interest rates produced a distorted economy where wealthy individuals gained more wealth without making profits, and those without assets saw their incomes and living standards stagnate. Low-interest rates produced companies like Uber, and socialized losses for bank failures. Low-interest rates meant TSLA became the most valuable company in the world while turning a loss.…

I don't disagree with anything that you are saying. The parent topic is about inflation, and throughout the least 13 years, inflation has not been a problem until - in my opinion - faulty fiscal policy during Covid.

In other words, had both monetary and fiscal policy stayed the same, inflation would not have happened to the extent we are dealing with right now. But fiscal policy (government handouts) was extremely liberal after Covid, and that put us out of balance.

Re: Federal Reserve lent $300B in emergency funds to banks in the past week

#170

Post by fosk »

light_hue_1 wrote: post #168
fosk wrote: post #45

Earlier quoted context omitted.

As long as the regular Joe doesn’t get extra money to spend, inflation will be check. Banks won’t go buy eggs anytime soon. We had close to 0% interest rates for almost a decade, and inflation was in check. It’s not the Fed that caused inflation, it is: * Suspending school debt (extra income) * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses) * Supply chain bottlenecks after Co…

This doesn't even pass the smell test. > It’s not the Fed that caused inflation, it is: > > * Suspending school debt (extra income) School debt repayments are about $100B per year ($0.1T). > * Injecting real cash into the economy (stimulus checks and PPP loans to small businesses) $800B in stimulus checks. PPP was about $800B as well. So we're talking $1.6T over 3 years, $0.5T/year. The US economy is $23T. Let's put…

Defense spending doesn't contribute not even a little bit to how inflation (CPI) is being calculated, because the DoD is spending money on stuff that doesn't affect the general population. Unless everyone is trying to buy an F22, of course, and that finds its way into the CPI.

Not every expense is the same when it comes to the cost of general goods and services.

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