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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

#211

Post by [deleted] »

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…

[deleted]

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

#212

Post by 8note »

dragonwriter wrote: post #206
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…

> Inflation was there all along in asset prices “Inflation”, unqualified, means consumer price inflation. Asset price inflation is a completely different thing, with slightly overlapping potential causes, and completely different effects. > 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 l…

The distinction is dumb. People's main thing they have to pay on a regular basis is rent or mortgage, so the cost of housing should be included in the consumer inflation index.

A 10000x increase in rent makes carrots unaffordable even if the price of carrots hasn't changed

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

#213

Post by 8note »

lazide wrote: post #114
arcticbull wrote: post #111

Earlier quoted context omitted.

Then why didn't it happen in Japan? Same easy money, no increase in house prices. It's not the interest rates, it's the zoning rules. [1, 2] [1] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [2] https://fred.stlouisfed.org/series/INTDSRJPM193N

No, Japan has had massively crashing population, which offset the massive inflationary impact. https://www.macrotrends.net/countries/JPN/japan/population-g... Despite a massive decrease in population, Japan has been mostly flat, when they should be in a strong deflationary environment due to demand destruction - because, you know, people being dead. So hey, if the US population would decrease .5% a year (doesn’t soun…

People being dead also means that people aren't working to provide those services and goods

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

#214

Post by 8note »

arcticbull wrote: post #154
lazide wrote: post #119

Earlier quoted context omitted.

Have you been to Japan? There is massive excess supply of housing in Japan. They literally demolish entire villages because no one lives there anymore. Everyone who can moves to Tokyo, and prices there are insane. In the US, if we had 288 million homes, the big question would be ‘where?’. We already have millions of acres of land with literally no zoning rules at all. Even Greenlee County Arizona (1500 sq miles) is m…

You’re fighting a straw man, nobody is arguing you need to do what Japan did verbatim. The only argument I’m making is when you allow supply and demand to meet prices stop going up. All the rest is narrative. The answer to where is “up.” Also the prices in Tokyo aren’t insane at all they’re super affordable by any standard.

You've skipped over the criticism.

Put a billion houses on Jupiter, and their value will be zero, while new york remains expensive

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

#215

Post by 8note »

fdr wrote: post #131
pton_xd wrote: post #112

Earlier quoted context omitted.

Energy isn't included either. Kind of amazing they can get away with publishing an inflation stat that excludes every core household expenditure category.

there's no getting away with anything. The inflation stat "everyone" uses is preferred by economists because it is not as noisy, i.e. it has better temporal auto-correlation. However, there are all-inclusive metrics as well, and in fact those are used to compute the I-bond yield. https://www.bls.gov/news.release/cpi.t01.htm

It still has political side benefits, which is likely why economists who prefer it get funding to continue their research etc.

The "getting away with it" is that in some forms, the wealthy can say it's bad that poor people get money because "it makes inflation" but when rich people get money, it's ok, because the resulting cost increases don't show up on the CPI

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

#216

Post by mrcode007 »

creato wrote: post #182
mrcode007 wrote: post #167

Earlier quoted context omitted.

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.

As long as there aren't any eggs going unsold, this is irrelevant to the price of eggs. If anything, the opposite is happening: sporadically there are limits on how many eggs one customer can buy in my grocery store.

Companies are deliberately limiting supply now as part of revenue management. Growing revenue can be simplistically thought of as maximizing a function of units sold * price per unit. You can decrease numbers sold and increase the price or the converse; 2 units * $10 or 10 units * $2. There is mounting evidence across countries and continents that this is what’s been going on.

https://archive.is/1EbGX

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

#217

Post by 8note »

fosk wrote: post #64
rqtwteye wrote: post #52

Earlier quoted context omitted.

I don’t really understand the inflation situation. When house prices shot up, heath care costs shot up, education costs shot up there was no inflation. But when the little guys got some money, suddenly we call it inflation. I don’t really get it.

When you give to 300+ million people extra cash to spend, you have inflation, yes. I am not arguing that “before” it was better for the “little guys”, I am just making an observation. You can affect the economy with fiscal policy (what our politicians/government does) and monetary policy (the central bank). Turns out monetary policy didn’t cause inflation to rise as much, as the previous 13 years demonstrate, but it…

This keeps the question "what is inflation?"

If you consider that assets and results rents on those assets skyrocketed while "inflation" wasn't happening, then sure, but realistically, the dollar lost value and people got poorer in that time while having the same or increasing income

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

#218

Post by 8note »

zeroonetwothree wrote: post #165
hedora wrote: post #124

Earlier quoted context omitted.

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.

Surely the government would keep giving them, with some proff that somebody actually wants to complete a useful degree.

I think in the future, those student debt punishments will be looked on in a similar way to indentured servitude. At best, forced to work (though for an indefinite, likely forever time period) for whoever gave the loan, and at worst, much worse.

Debts are risky, and should occasionally be discharged with bankruptcy. Zero risk loans make zero interest

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

#219

Post by perryizgr8 »

phailhaus wrote: post #155
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.

SVB and Signature banks both failed , their shareholders walked away with nothing. This does not encourage risk-taking on the part of the banks.

> their shareholders walked away with nothing

Not true. The shareholders and executives walked away with millions in stock grants and bonuses for about a decade, benefitting from their strategies that led to the bank's downfall. If they are fined their entire earnings in the last 10 years then I would consider them walking off "with nothing".

So will they do this again in a similar situation? Of course! There are millions to be made!

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

#220

Post by dragonwriter »

8note wrote: post #212
dragonwriter wrote: post #206

Earlier quoted context omitted.

> Inflation was there all along in asset prices “Inflation”, unqualified, means consumer price inflation. Asset price inflation is a completely different thing, with slightly overlapping potential causes, and completely different effects. > 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 l…

The distinction is dumb. People's main thing they have to pay on a regular basis is rent or mortgage, so the cost of housing should be included in the consumer inflation index. A 10000x increase in rent makes carrots unaffordable even if the price of carrots hasn't changed

> The distinction is dumb.

You would be better positioned to make that argument if you could demonstrate a basic understanding of what the distinction is.

> People’s main thing they have to pay on a regular basis is rent or mortgage, so the cost of housing should be included in the consumer inflation index.

The cost of housing as a consumer good (rent, actual or, for homeowners, imputed) is included in inflation measures (consumer price index, PCE, etc.)

The asset price of residential real estate is not, but that’s a different thing.

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