Yoshua wrote:
The Repo spiked because the banks froze their lending? And that is why the Fed had to step in?
Outcast_Searcher wrote:Yoshua wrote:
The Repo spiked because the banks froze their lending? And that is why the Fed had to step in?
Why not try READING some of the good articles various folks have posted here, where real economists discuss the situation? And maybe even learn something, instead of continuing to ask the same sort of questions, ad nauseam?
They must think something is going on.
Revi wrote:I noticed that the Fed is expected to lower interest rates again.
They are throwing all their firepower at the situation.
They must think something is going on.
Yoshua wrote:But why have the banks burned through the reserves they had access to?
There's a black hole somewhere in the economy. That black hole is right in front of our eyes: the government debt is growing faster than the GDP.
The Fed will now build up those bank reserves again by buying all those treasuries that the banks hold on their balance sheets.
The Fed will monetize the government debt.
So what basically caused the Repo to spike was that the banks had burned through half of their reserves that the Fed had created for the banks after the financial crisis.
The reserves have been declining for some reason.
The global economy owns the banks USD 240 Trillion. If the banks don't keep lowering rates, then the global economy defaults and brings the banks down.
rockdoc123 wrote:The global economy owns the banks USD 240 Trillion. If the banks don't keep lowering rates, then the global economy defaults and brings the banks down.
please show us which large economies in the world are at risk of defaulting on interest payments and maturities at current rates. As I've mentioned a number of times the carrying costs on US debt make up less than 10% of it's annual budget, meaning they have zero problem at these rates meeting payments.
The Coming Pension Crisis Is So Big That It's A Problem For Everyone
https://www.forbes.com/sites/johnmauldi ... e598f37fc5
" .......... We have multiple parties fighting over pieces of the same pie, all hoping that Uncle Sam will step in and save them. Uncle Sam may well do it, too, but it won’t remove the pain.
It will just redistribute the burden, perhaps more widely, but the aggregate amount won’t change.
I see this leading to some kind of Japan-like deflationary recession or debt monetization. If we’re lucky, it will be mild and long. It won’t be fun but the alternatives would be worse.
GHung wrote:rockdoc123 wrote:The global economy owns the banks USD 240 Trillion. If the banks don't keep lowering rates, then the global economy defaults and brings the banks down.
please show us which large economies in the world are at risk of defaulting on interest payments and maturities at current rates. As I've mentioned a number of times the carrying costs on US debt make up less than 10% of it's annual budget, meaning they have zero problem at these rates meeting payments.
Yep. And let's conveniently skip the part where, at the currently low (negative?) interest rates, the average saver and things like pension funds have a big problem growing their wealth in order to meet their expected returns and obligations. OH,,,, maybe they can all invest in oil prospects, eh?
Funny how a bit of cherry picking various economic sectors can put a good spin on what is really a conundrum, especially by those who display the hubris of their own perceived wealth. No point in having any concern for those whose fortunes aren't as 'fortunate' as yours. Right doc? Or those who haven't even yet entered this economy that is basically fucked, long-term.
Trump is desperate to get interest rates down, down, down, so the debt he's creating to maintain his tax cuts can be, as you imply, "serviced".The Coming Pension Crisis Is So Big That It's A Problem For Everyone
https://www.forbes.com/sites/johnmauldi ... e598f37fc5
" .......... We have multiple parties fighting over pieces of the same pie, all hoping that Uncle Sam will step in and save them. Uncle Sam may well do it, too, but it won’t remove the pain.
It will just redistribute the burden, perhaps more widely, but the aggregate amount won’t change.
I see this leading to some kind of Japan-like deflationary recession or debt monetization. If we’re lucky, it will be mild and long. It won’t be fun but the alternatives would be worse.
Maybe you're old enough that you can hope your wealth doesn't get redistributed (bailed in), and don't give a shit what kind of mess we leave behind. Me? I care.
Yep. And let's conveniently skip the part where, at the currently low (negative?) interest rates, the average saver and things like pension funds have a big problem growing their wealth in order to meet their expected returns and obligations. OH,,,, maybe they can all invest in oil prospects, eh?
Funny how a bit of cherry picking various economic sectors can put a good spin on what is really a conundrum, especially by those who display the hubris of their own perceived wealth. No point in having any concern for those whose fortunes aren't as 'fortunate' as yours. Right doc? Or those who haven't even yet entered this economy that is basically fucked, long-term.
Trump is desperate to get interest rates down, down, down, so the debt he's creating to maintain his tax cuts can be, as you imply, "serviced".
rockdoc123 wrote:You also don't seem to understand what motivates billionaires like Trump to want lower tax rates. As an example it isn't unheard of for the very wealthy to get long term loans at rates well below prime. Let's say, for instance that a billionaire takes out a $10 MM loan over a 30 year period and gets a rate of 2.0% (probably could have done better with the right bank). The bank is happy as this amount is inconsequential to the individuals total net worth and obviously there is no worry of him paying it off...essentially zero risk. He takes that $10 MM and invests in the market to get an annual return of 4% (easily done today without taking on much in the way of risk especially when you wind in dividends and equity). The result is he makes 2% on that 10 million right out of the gate or ~$200,000 at zero cost to himself.
Why does the billionaire not take $10M of his own money to invest, instead of getting a loan?
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