U.S. Fed accepts $756B in daily reverse repo operation • Hacker News Board

Re: U.S. Fed accepts $756B in daily reverse repo operation

#91

Post by vmception » Thu, Jun 17, 2021, 9:24 PM UTC

jules-jules wrote: post #83

vmception wrote: post #48

Earlier quoted context omitted.

> There is no argument that the advent of blockchain democratised access to finance. You’d think MySQL would have been the tool to tackle this obvious use case over all these years if you read this forum

Didn't you get the memo, there really is no use case for blockchain.

I kind of like the moving goal posts for being against blockchain based digital assets and settlement, I think it accelerates a lot of the improvements and everyone inside the space gets to participate in this global boom town either way

Its interesting how outdated the detractors ideas get, and fascinating what new detractions they come up with

Re: U.S. Fed accepts $756B in daily reverse repo operation

#92

Post by edgyquant » Thu, Jun 17, 2021, 9:24 PM UTC

rsp1984 wrote: post #79

joosters wrote: post #61

Earlier quoted context omitted.

To the banks, it's a debt and hence a liability. If you put money in your bank account, then the banks owe you money.

Yea, but you gave the bank the money first. Which brings us back to the first question: How is holding cash a liability? Are they worried about deflation?

Deflation would be a good thing (as the cash would be worth more.) Cash is a depreciating asset due to inflation (it isn’t a liability.)

Re: U.S. Fed accepts $756B in daily reverse repo operation

#93

Post by [deleted] » Thu, Jun 17, 2021, 9:24 PM UTC

rsp1984 wrote: post #79

joosters wrote: post #61

Earlier quoted context omitted.

To the banks, it's a debt and hence a liability. If you put money in your bank account, then the banks owe you money.

Yea, but you gave the bank the money first. Which brings us back to the first question: How is holding cash a liability? Are they worried about deflation?

[deleted]

Re: U.S. Fed accepts $756B in daily reverse repo operation

#94

Post by notahacker » Thu, Jun 17, 2021, 9:27 PM UTC

MuffinFlavored wrote: post #34

guffaw5 wrote: post #7

Earlier quoted context omitted.

Banks have a ton of cash, and they're worried about inflation. So, they store their cash with the fed (through a repo [repurchase] agreement) temporarily. [0] What is a repo? - https://www.richmondfed.org/publications/research/econ_focus... [1] Repos in charts - https://fred.stlouisfed.org/series/RRPONTSYD

> they store their cash with the fed (through a repo [repurchase] agreement) temporarily. What does this gain them? Are they paid interest?

Contrary to the other two replies, yes, they are paid interest (it's a reverse of the standard repo where they borrow money from the Fed and pay the interest)

Re: U.S. Fed accepts $756B in daily reverse repo operation

#95

Post by post_break » Thu, Jun 17, 2021, 9:28 PM UTC

sschueller wrote: post #23

babaganoosh89 wrote: post #17

Earlier quoted context omitted.

That's what 0% interest rates are like. Limitless amounts of money as long as the economy has enough confidence to use it.

Yet I can't get a 0% interest load anywhere. How does this benefit anyone other than large institutions?

I got 0% on a $5,000 line of credit recently. Refinanced my house at 2.5%, etc.

Re: U.S. Fed accepts $756B in daily reverse repo operation

#96

Post by adflux » Thu, Jun 17, 2021, 9:32 PM UTC

throwawaycities wrote: post #40

enraged_camel wrote: post #14

This might be an unpopular opinion, but the economy we have right now feels quite fake, for lack of a better word, in the sense that the official numbers that are reported don't seem to reflect its actual health. I find it deeply concerning that every warning sign is summarily dismissed as "transitory" and the government and the Fed continue to drive full speed ahead.

Not sure why you are down voted, everyone (when it benefits them) takes credit for the “greatest economy the world has ever seen” and “record stock market”, simultaneously they ignore record wage stagnation, record income gaps, record homelessness, record student loan defaults, record debt defaults of nearly every kind, record young people living at home to record high ages…I’d say record high unemployment, to which…

Cancel a debt and you won't immediately see "number go up". Hence probably even less attractive from a political standpoint

Re: U.S. Fed accepts $756B in daily reverse repo operation

#97

Post by [deleted] » Thu, Jun 17, 2021, 9:46 PM UTC

sschueller wrote: post #23

babaganoosh89 wrote: post #17

Earlier quoted context omitted.

That's what 0% interest rates are like. Limitless amounts of money as long as the economy has enough confidence to use it.

Yet I can't get a 0% interest load anywhere. How does this benefit anyone other than large institutions?

[deleted]

Re: U.S. Fed accepts $756B in daily reverse repo operation

#98

Post by doggosphere » Thu, Jun 17, 2021, 9:46 PM UTC

nverno wrote: post #68

1-6 wrote: post #65

Earlier quoted context omitted.

If money is printed, can it ever be destroyed?

yes, taxes for example. The Fed has power to print and destroy

Not technically a fed responsibility. Taxation and spending is fiscal policy.

The fed can affect money supply by raising interest rates.

Re: U.S. Fed accepts $756B in daily reverse repo operation

#99

Post by tibbydudeza » Thu, Jun 17, 2021, 9:48 PM UTC

Definitely not an economist so reading stuff like this makes me think "heck just give everybody a million dollars".

Re: U.S. Fed accepts $756B in daily reverse repo operation

#100

Post by seoaeu » Thu, Jun 17, 2021, 9:53 PM UTC

gregwebs wrote: post #71

This event doesn't make sense if you have assumed that banks take deposits and then loan that deposit money out. In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event! Cash might seem like an asset. But in reality the loan is the asset that pays the bank money and cash is the liability because the cash can be w…

> In reality deposits only cover around 10% of the loan. This is called fractional reserve banking and it means that a bank loan is actually a money creation event!

That's not how fractional reserve banking works. If I deposit $100 in a bank, they're not allowed to lend out $1000. In fact given a 10% cash reserve ratio, the limit is actually $90. The other $10 has to stay at the bank "in reserve", at least in theory. (In practice there's additional complexity because banks can borrow money to fulfill their reserve requirements.)

When people talk about money creation from fractional reserve banking, what they mean is that someone has $90 from the loan and someone else has $100. Which sums to $190: more than the initial deposit.