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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

#251

Post by lazide »

arcticbull wrote: post #239
8note wrote: post #214

Earlier quoted context omitted.

You've skipped over the criticism. Put a billion houses on Jupiter, and their value will be zero, while new york remains expensive

But if you put a billion houses on Manhattan their value will be zero. There's almost an unlimited amount you can build up. The problem is we're currently putting houses on Jupiter instead of Manhattan through arbitrary restrictions on density. There's single-family zoning in San Francisco! 94% of San Jose. 15% of NYC (25% if you include single and two-family zoning). It's wild. [1] And that's if you can even get the…

If you put a billion houses on Manhattan, MOST of those billion houses would be worth nothing, and the ones where people wanted to be (which is probably not Manhattan if a billion houses were blocking out the light - but I digress) would still be expensive.

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

#253

Post by antibasilisk »

ahoya wrote: post #249
antibasilisk wrote: post #102

Earlier quoted context omitted.

ETH has extreme problems to the point where it's worse than fiat, there's no good reason to be grouping it in with BTC. Even something like Dogecoin, which need I remind you was invented as a joke, has a stronger case for replacing fiat than ETH.

More btc is printed per year than eth.

BTC cannot be printed, it's a fixed supply.

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

#254

Post by lumost »

fosk wrote: post #193
rqtwteye wrote: post #174

Earlier quoted context omitted.

"and throughout the least 13 years, inflation has not been a problem until - in my opinion - faulty fiscal policy during Covid." It was a problem for a lot of people who either got priced out of the housing market or have huge student loans or have huge healthcare bills. The price of eggs or gas is really not much of a problem when the price of these big ticket items shoots up.

> It was a problem for a lot of people who either got priced out of the housing market or have huge student loans.. It may have been, but that was not reflected in the CPI, and we are talking about inflation as it is officially recorded in the CPI reports. The CPI inflation didn't spike up until early 2021.

The point is that many asset poor Americans saw the inflation as moderately beneficial due to higher wages. These higher wages made homes appear more affordable. The CPI measure underestimates inflation for individuals who need to acquire assets like homes.

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

#255

Post by matheusmoreira »

mountainriver wrote: post #241
matheusmoreira wrote: post #238

Earlier quoted context omitted.

> collapse the banking system Exactly. > screw over millions of people People who loaned their money to the banks. Why shouldn't there be consequences for lenders?

Actually it would likely collapse the entire economy as thats whats historically happened. Then you have tons of people out of work and starving so you could feel some sense of justice for a few

Maybe if people suffer enough they'll learn not to build a debt-based house-of-cards economy that requires hundreds of billions in taxpayer bailouts at the slightest threat of insolvency and defaults.

Oh who am I kidding? They'll just go back to banks again, every single time.

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

#256

Post by lamontcg »

Dylan16807 wrote: post #247
lamontcg wrote: post #179

Earlier quoted context omitted.

> Why didn't banks liquidate their long-term bond holdings a year ago? Who do "the banks" sell them to? A bank can sell them to another bank. Someone is still sitting on it. We can't sell mortgage bonds to space aliens yet AFAIK, and other banks in other countries can also see that they don't want to touch them in a rising rate environment, and they'll have their own problems back home. Economics 101 is learning that…

Specifically the issue was certain banks having much too high a ratio of long-term bonds, and they could have sold those to less concentrated investors without upending the market.

The US Banking system as a whole is sitting on $620B of underwater bonds.

https://fortune.com/2023/03/10/svb-collapse-fdic-takeover-ma...

I doubt anyone wants more than they already have.

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

#257

Post by Dylan16807 »

lamontcg wrote: post #256
Dylan16807 wrote: post #247

Earlier quoted context omitted.

Specifically the issue was certain banks having much too high a ratio of long-term bonds, and they could have sold those to less concentrated investors without upending the market.

The US Banking system as a whole is sitting on $620B of underwater bonds. https://fortune.com/2023/03/10/svb-collapse-fdic-takeover-ma... I doubt anyone wants more than they already have.

The market thought they were fine at the time. If only the banks with the most rate risk were selling, the price would have been stable.

It's too late now, but there was a big period of time where the rate risk was obvious but the price was still good because institutions were comfortable with that bet. And it was okay for 95% of them to make that bet, just not the ones going too hard on it.

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

#259

Post by wesapien »

Findeton wrote: post #3

This is another QE/Quantitative Easing, even if they don't call it that way. I hope inflation doesn't come back/get higher again because then we'd likely see the kind of second wave inflation people saw in the 70s.

According to the internet it's a loan to prevent these affected banks from failing. Some things are going to fail and go under in the effort to lower inflation. Better them than everyone else. Call it trimming the fat or taking out the trash. If it weren't for the low interest rates/near zero rates, some entities wouldn't even exists now. I spoke to a trader and he said even retail traders could've telegraphed the changing rate conditions and made adjustments. Why wouldn't banks?

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

#260

Post by wesapien »

fosk wrote: post #72
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…

Housing prices were going up because of supply/demand and not necessarily because of systemic high inflation. By the way just with regular Because homes cost a lot of money to begin with, the compounding effects of “healthy” inflation is going to be noticeable, and that doesn’t even factor in the low supply in the market.

All the people that only saw the city for work/employment now don't have to live there. That was huge. Now we wait what's going to happen to all these office real estate. The office doesn't need to go away but not everyone has to have one these days.
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