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U.S. bank lending slumps by most on record in final weeks of March

finance.yahoo.com

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Re: U.S. bank lending slumps by most on record in final weeks of March

#31

Post by adamsb6 »

JumpCrisscross wrote: post #28
kneebonian wrote: post #14

Earlier quoted context omitted.

The problem is that when you put a dollar in savings or a dollar in the stock market you are actually "creating" an extra dollar from an economic standpoint. If I put a dollar in the bank the bank can then use that dollar to loan to someone else, but I still have "my" dollar. So where there was 1 dollar there are now 2. Once we start pulling money out of investment vehicles we aren't only removing that money but also…

> I put a dollar in the bank the bank can then use that dollar to loan to someone else This isn’t how banks work. When “a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money” [1]. Loans create deposits, not vice versa . [1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Fractional reserve requirements limit the amount of loans a bank can make relative to its deposits.

Re: U.S. bank lending slumps by most on record in final weeks of March

#32

Post by wintogreen74 »

s1artibartfast wrote: post #15
n00bskoolbus wrote: post #6

Earlier quoted context omitted.

Lets just hope it's done by the government and not by private corps gouging people who just need care.

I think that's a pretty unrealistic hope. I don't think the government is going to spin up up millions of workers to be in home caregivers and start building government funded nursing homes. That's not to mention the budget implications is such care. Some states are looking at or implementing new mandatory Insurance programs nursing home care, but these are far too late for Boomers to pay into them in a meaningful wa…

Even government homes (in Canada) are often income/wealth-adjusted.

Re: U.S. bank lending slumps by most on record in final weeks of March

#33

Post by toast0 »

s1artibartfast wrote: post #15
n00bskoolbus wrote: post #6

Earlier quoted context omitted.

Lets just hope it's done by the government and not by private corps gouging people who just need care.

I think that's a pretty unrealistic hope. I don't think the government is going to spin up up millions of workers to be in home caregivers and start building government funded nursing homes. That's not to mention the budget implications is such care. Some states are looking at or implementing new mandatory Insurance programs nursing home care, but these are far too late for Boomers to pay into them in a meaningful wa…

If you have medical necessity, Medicaid pays for long term nursing homes once you meet their financial requirements (spend down assets and have low enough income).

Some nursing homes specialize in medicaid patients, which isn't much different than a government funded nursing homes IMHO.

Re: U.S. bank lending slumps by most on record in final weeks of March

#34

Post by sandworm101 »

noughtme wrote: post #30
JumpCrisscross wrote: post #22

Earlier quoted context omitted.

> they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing Withdrawing from a 401(k) has no real effect. Spending the proceeds does. The decrease in purchasing power blunts the restrictive effects of those savings being spent with no corresponding contemporaneous production. > a prolonged slump is coming Careful. America is uniquely tuned to benefit from…

Wouldn’t withdrawing from your 401k and transferring it to a checking account limit the pool of funds available for equity investment and move it into lower risk assets?

The money in your checking account is still available for lending. Most every dollar on deposit with a "bank" remains available for that bank to use/leverage/loan. Money isn't really parked until you stash it as cash under your mattress.

Re: U.S. bank lending slumps by most on record in final weeks of March

#36

Post by ljoshua »

When the article says, “Commercial bank lending dropped nearly $105 billion in the two weeks ended March 29, the most in Federal Reserve data back to 1973,” and later also notes that banks “divested” themselves of billions of dollars in loans, where is the money going?

Are they selling the loans off their books to third parties? Or are they just refusing to make new loans that they would have otherwise consistently made?

Re: U.S. bank lending slumps by most on record in final weeks of March

#37

Post by dangwhy »

anonporridge wrote: post #17
analyst74 wrote: post #3

Earlier quoted context omitted.

Coincidentally, I just saw two separate job ads on the subway looking for caregivers. Maybe the next booming sector would be taking care of retired boomers.

Retiree wealth mining is the next great gold rush! One interesting scheme I recently came across is an assisted living home that doesn't take regular payments. Instead, they have their residents sign over their entire net worth at the event of their death, leaving nothing for their inheritors. The tradeoff is that they get to stay for as long as they live. Of course, this scheme has some obvious perverse incentives f…

Is there a minimum net worth to get accepted?

Re: U.S. bank lending slumps by most on record in final weeks of March

#38

Post by amanaplanacanal »

adamsb6 wrote: post #31
JumpCrisscross wrote: post #28

Earlier quoted context omitted.

> I put a dollar in the bank the bank can then use that dollar to loan to someone else This isn’t how banks work. When “a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money” [1]. Loans create deposits, not vice versa . [1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Fractional reserve requirements limit the amount of loans a bank can make relative to its deposits.

That only works if the requirement is above zero. Which it isn’t.

Re: U.S. bank lending slumps by most on record in final weeks of March

#39

Post by iamdamian »

adamsb6 wrote: post #31
JumpCrisscross wrote: post #28

Earlier quoted context omitted.

> I put a dollar in the bank the bank can then use that dollar to loan to someone else This isn’t how banks work. When “a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money” [1]. Loans create deposits, not vice versa . [1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Fractional reserve requirements limit the amount of loans a bank can make relative to its deposits.

Are there still fractional reserve requirements in the U.S.?

Re: U.S. bank lending slumps by most on record in final weeks of March

#40

Post by bastardoperator »

kneebonian wrote: post #2

The days of cheap capital are over, and not because of the Fed. The largest generation, boomers, are now retiring. Up until now they've been pumping money into the economy and the investing with their 401k and things like that. Now that trend is reversing as they retire they are taking money out of the 401k, out of their life savings, at the same time their purchasing power is decreasing. The end result is a lot less…

I like to blame boomers for stuff too, but this seems like a big stretch.
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