Submitted by Mega-Lithium t3_120143p in wallstreetbets
Comments
Mega-Lithium OP t1_jdf9rml wrote
Ha. A $400 Billion helicopter drop is a helluva way to fight Inflation.
Let’s throw some gas on that fire!
SeemoarAlpha t1_jdffdrf wrote
It's a $400 billion dumpster fire extinguisher. It isn't particularly inflationary since it is unlikely this bank liquidity replenisher will result in banks making more loans and expanding the money supply.
key-wavelength t1_jdfo5hj wrote
Yeah, but when they turn around to buy bonds with it, it will drive yields down, undermining the Fed's ability to raise rates.
Wander21 t1_jdfuz6x wrote
It's a cash reserve for bank to survive, and BTFP rate is overnight rate + 10bps, don't make sense using expensive money to buy bonds yield lower cash than that
DYTTIGAF t1_jdg0yjw wrote
Currency was created and inserted into the economy nonetheless. What happens when banks "do what they're supposed to do" which is lend it out and leverage that pile of capital 10X or more?
They have 0% reserve requirements since those restrictions were lifted during COVID.
It's not this particular instance but the steady stream of customers (Signature, First Republic, etc.). Who's next U.S. Bancorp, or Comerica?
The solution is accountability. Fraud and loss cannot constantly be subsidized. It's the moral hazard. Banks saying: "Fuck it. Let's be stupid. The Fed will make us whole".
There's no discipline. Every skinned knee get to go to the emergency room paid for by a third party.
nyse125 t1_jdglem2 wrote
If you're referring to the march 2020 QE/money printing program then yes but otherwise no new money has been injected into the economy since.
DYTTIGAF t1_jdgpeww wrote
You do realize these banks use their balance sheets for collateral?
We're getting ready to seen a tsunami of withdrawals in the next 60 days once the public's recognition of the fact takes hold that the FDIC can cover just 1.5% of all demand deposits.
Businesses, non profits, LLC, teaching institutions, and of course retirees holding above $250,000 with bank CD's all decide to seek saftey immediately.
Your going the see the folly of the decision to drop the reserve requirements to 0%.
MMM does not calculate "fear and greed" in any of its theoretical assertions. It leaves out the nastiness of a capital collapse from consideration. It leaves out the brutality and fear of the counter parties in a financial transaction.
I've been there. I've experienced it first hand. This is the moment that all the undisciplined behavior by these banks is going to be discovered and brought to the light.
Banking and capital preservation needs a "hard discipline" to make sure capital allocation is accountable and controlled.
Otherwise (as you saw with Credit Suisse last weekend) executives run for cover and all the skills that were supposed to keep a collapse from happening... disappears.
nyse125 t1_jdgs2ir wrote
All of this is moot since fed is providing liquidity to these banks as needed on a loan expiring in a year.
Mega-Lithium OP t1_jdhgnrd wrote
Fed already has almost 9 trillion on its balance sheet. Where is this money gonna come from?
nyse125 t1_jdi6g7r wrote
Banks are borrowing from the fed. The fed already has cash on hand...
DYTTIGAF t1_jdgv8tx wrote
No. That would be the nationalization of the banking system for the $19 trillion sitting in deposits (if people lose confidence). You can only play this game for so long. The FDIC as of last week had $128 billion and the balance sheet of the Fed is at almost $10 trillion. This would make the US Dollar worthless.
The US Dollar would be crushed. We are at risk of losing Reserve Currency Status if this gets out of control.
It's the mentality the Fed can : lend, promise, backstop, and securitize their way out of this jam.
Remember in 2008 they had a balance sheet of less than $1 trillion. Now in 2023 it's $10 trillion.
nyse125 t1_jdgvzdf wrote
Unless the fed, for whatever reason, stop or cannot provide temporary liquidity then sure you can debate ifs and how's. The fact of the matter remains, BTFP is here to give temporary ease while their balance sheet should reduce a year from now.
Considering the fact that BTFP is a new isntallment in their toolkit, assumptions regarding this is nothing but a baseless conspiracy. US dollar can absolutely not be destroyed in this process because while BTFO is a deflationary process, as rate cuts kick in eventually everyone will conveniently forget about the possible problems this "would've" caused.
DYTTIGAF t1_jdgxt5p wrote
No. It's confidence in the currency that cannot remanufactured with policy statements.
Please document in the last 30 years when the Federal Reserves "toolkit" has reversed the dollars decline in purchasing power. You can submit 1 example (not hard).
The truth is you cannot. It's just one on acronym after another (QE #1-#4, Operation Twits, PPP supported check dispersonal, Corpirate Debt Purchading Normalization, etc).
The destruction of the currency will occur with a 25% decline (its the 1 to 100 leverage in the currency futures markets that would create the choas).
We shall find out soon. I personally give the Federal Reserve 60 days before price discovery in the currency markets concludes the Russian ruble, or Chinese yuan will offer a better store of value than the US Dollar.
We fund our national debt with short term sovereign debt products such as T-Bills and Notes. You have investors worldwide who are watching the principle destruction occurring on the balance sheets of the banks.
They're not stupid. Why would they roll over that debt for another 6 months to a year? They won't (resulting in a no bid at the debt auctions).
This is the real dilemma the Treasury is staring down tonight.
We shall see.
TSLA240c t1_jdhw559 wrote
Do you honestly believe banks will magically be liquid in a year?
The second the Fed goes to unwind this program it will put us right back in the same boat. This happens every single time the Fed attempts to unwind it’s “temporary” liquidity programs.
The only way to unwind debt is to bankrupt it or monetize it, borrowing from Visa to Amex is a stall tactic not a solution.
nyse125 t1_jdi6ujq wrote
You honestly believe fed won't concoct some more bullshit to kick the can down the road as long as the massive bubble of everything still remains affordable to live under?
As long as QT is still in play this is hardly an issue. Fed might as well outright bail them out than resorting to BTFP even a year from now to avoid any stress in the financial markets as they always do.
TSLA240c t1_jdifaxz wrote
They will absolutely come up with some more bullshit to kick the can with things already unaffordable.
QT isn’t in play any more, they’ve undone the last 5 months in a matter of 2 weeks. This endless monetization of debt instead of allowing it to bankrupt out naturally just increases the money supply causing inflation. The Fed is simultaneously raising rates to slow inflation while injecting cash to permanently monetize bad debts that can never be repaid.
nyse125 t1_jdiit6t wrote
> they’ve undone the last 5 months in a matter of 2 weeks.
I dont think you understand how BTFP works. The "spike" in the balance sheet isnt QT being turned off but after the treasury interest is forfeited, the balance sheet should go back down a year from now. Again, this is literally providing temporary liquid to the banks. If QT was undone we wouldn't have a single red day this past week.
TSLA240c t1_jdil6gl wrote
The Fed is still slowly allowing government bonds to lapse while simultaneously buying new bonds from banks to the tune of a net gain of +400b over the past 2 weeks, that’s QE not QT.
And here I thought you understood that this isn’t going to be temporary. Banks will be in no better position a year from now when these bonds start to lapse and the Fed begins some new “temporary and definitely not money printing” program.
nyse125 t1_jdj04k7 wrote
QE is inflationary and bullish but BTFP is deflationary and hawkish. Like I said, the markets would be a lot more positive if what you thought was true.
Money printing is insanely bullish but we haven't crossed that line yet and there isnt anything that suggests such.
TSLA240c t1_jdj7h0r wrote
BTFP in the short term is definitely inflationary it converts bad/long term debts into cash monies. It only becomes deflationary when all those bonds are repaid to the Fed in a year removing the “temporarily” added liquidity from the economy. Which, I mean, come on.
Also your sauce was last updated Feb 28
nyse125 t1_jdj8zb2 wrote
Wrong. BTFP is when banks give the fed their treasuries and receive money in return, BUT AGREE TO SWAP BACK IN ONE YEAR. It looks the same on balance sheets, but it’s wildly different, especially because this deal is structured as a loan and the banks PAY overnight plus 10 bp for the privilege.
If a bank takes out 100B in BTFP, 1 year from now they will need to pay the fed 100B, plus ~4.5B in interest on the loan, AND they forfeit the ~2.5B on the treasuries interest. From the perspective of the fed, their balance sheet INCREASES by 100B right away, and then DECREASES by $107B in one year.
Literally the only reason for banks to take this loan is to give cash to depositors who are making withdrawals. It costs the bank -7% annualized. They do this to avoid realizing a -40% loss by selling treasuries to raise cash to give depositors.
Contrast this with QE, where the fed buys the treasuries from the banks for twice what they paid for them, and banks realize a 50% gain overnight and get to keep it forever.
Wildly different.
You will also not get "up to date" information anywhere on the M2 money supply.
TSLA240c t1_jdjdgnb wrote
You’re literally describing QE.
> Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity.
The central bank is buying bank securities to stimulate economic activity by ensuring liquidity keeps flowing.
What gives you any indication that in a year when the Fed asks for their $400b+ back the banks will be in any shape to repay?
The Fed hasn’t ever been able to string together 12 months of QT but surely this time it will be different.
nyse125 t1_jdjeyyz wrote
A year is a long way away for the Fed not to be just like - yeah keep it, which is the most likely scenario what you'll see a year from now and maybe then you can cheer QE. So no, it is not QE now because their balance sheet in this case goes down a year from now as it stands, as I have said many times just now.
QE = Banks realize a hefty gain and keep their bonds forever
BTFP = Take a mild loss but protect your depositors as Fed will give temporary liquidity.
There would be no reason for equities and bonds to drop if this was literally QE. Those definitions for QE and BTFP are nuanced so unless you don't see it in action it doesn't paint the entire picture.
TSLA240c t1_jdjngne wrote
It’s QE now because they are exchanging an illiquid asset for a liquid one. In a year if they repay it you can say it’s not QE.
I have no idea what you’re talking about QE always carries an interest rate with it, are you confused with government bailouts or the repo market?
Equities have been mixed but not down considering what a shit show of a week it’s been. It’s also possible this fresh liquidity will just blunt the effects of the rate increases.
nyse125 t1_jdkuk8w wrote
> It’s QE now because they are exchanging an illiquid asset for a liquid one.
How many times bruh, it is NOT. LMAO. Just becaise its an asset swap does not make it QE. It's a temporary backstop from the fed. What's not clicking?
TSLA240c t1_jdkxos3 wrote
What’s not clicking for you? You can’t just say it’s not then contradict yourself.
QE is an asset swap. It’s a swap of cash (asset) for government/corporate bonds (asset).
There is an argument that it’s not “money printing” since it has to be “repaid” but since the Fed just rolls over the debt forever it’s essentially as if the money were printed and injected into the economy.
nyse125 t1_jdkziwq wrote
Clearly you still haven't grasped BTFP if you still beleive it's QE. Then how come stocks arent greeen 24/7? Also they dont roll over the debt forever with this, we dont know what they'll do a year from now.
TSLA240c t1_jdl73z2 wrote
It is QE, just go and Google QE so we can put this to bed.
Stocks have been relatively green over the past week. Given how much catastrophically terrible news we’ve received it shows something ain’t kosher in the system.
Yes these aren’t supposed to roll over but we see time and time again the second the Fed goes to unwind it’s balance sheet something in the economy breaks and they reverse course, exactly like what we’re seeing once again with BTFP.
nyse125 t1_jdlegip wrote
If you read what I said then you'll literally realize how it's different. Even the btfp definition on Barron's suggests this too.
Proof-Brother1506 t1_jdjhy9u wrote
Whelp, fuck your bitch and the clique you claim. Me and my homie JD about to bomb on all y'all. Ain't one of y'all got sickle cell or something?
LegendsLiveForever t1_jdgavop wrote
That's not how that works...
Banks create loans out of thin air.
​
MMT’s view of how the credit mechanism works has since been confirmed by publications of the Bank of England and the Deutsche Bundesbank. This proves the conventional money supply theory to be scientifically outdated, because it claims that commercial banks are dependent on savings or central bank balances for lending, i.e. they “lend” savings or central bank deposits when they extend credit.
​
​
https://ibb.co/HBNSCyg - QE DOES NOT cause inflation.
Mega-Lithium OP t1_jdid9g6 wrote
I respectfully disagree
QE is not just an asset swap. The “banks” also goose the stock market and the economy through the resulting easy money policy
LegendsLiveForever t1_jdjkmw7 wrote
If, as some claim, the sale of new Treasury securities inhibited spending which kept prices from rising, then QE would have done the reverse, which it didn't. QE (QT) is just another bank buying (selling) gov securities.
In Japan, 0% rate policy for some 30 years along with massive 'money printing' QE, debt/gdp over 200%, minimal natural resources. Not without problems, but world class public infrastructure, universal healthcare, education, low unemployment, low inflation.
Source: https://ibb.co/12pw2Q0 https://ibb.co/Tt3qWdX
any bank can operate indefinitely with negative equity if the regulators allow it and continue to insure its deposits etc.)
DYTTIGAF t1_jdgd59m wrote
Sure. I heard those explanations 3 years ago. That's why the Federal Reserve has had to raise rates 9 times to address the problems associated with "theories" of how things are supposed to happen and the "reality" of what actually did.
[deleted] t1_jdgfoz5 wrote
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key-wavelength t1_jdfw1rz wrote
Oh, damn, thanks for the correction.
SeemoarAlpha t1_jdfvu56 wrote
Kind of depends, some banks need the liquidity to satisfy withdrawals or anticipated withdrawals. Many that are withdrawing are buying short term treasuries or putting it in money markets and that does have an effect on shorter duration bonds. As you move out the yield curve, look at the unprecedented whipsawing of the 2-year treasuries, the 10 year hasn't been as violent. The 10 year is what impacts the mortgage rates. Business loans are in the middle and that's where the fed wants to extinguish demand to reduce the money supply and quell inflation. It isn't an exact science and throw in the lag effect and you can see how mistakes can be made on the upside and the downside.
Mega-Lithium OP t1_jdfi3pl wrote
The point of lighting the dumpster fire in the first place was to “create pain”
Pain = unemployment and inflation decreasing
Saving the day every time a shit bank implodes is counterproductive
mytendies t1_jdg39g4 wrote
Please inform all market participants of this. They don’t get it
SeemoarAlpha t1_jdg644c wrote
Well that's the source of volatility isn't it? Some people get it, some don't, and they fight it out in the markets. The spectrum of "smart money" still follows the Gaussian distribution curve. Quiescent markets then converge on the reversion to the mean. Along the way, volatility is the mother's milk of the quant arbs, quietly vacuuming up the nickels and dimes of the frenetic who won't miss them.
ajalgamus t1_jdgsla2 wrote
Poetry
[deleted] t1_jdh8jmo wrote
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KingFIippyNipz t1_jdhg4r1 wrote
'it is unlikely that the assholes who spend other people's money to make their own money will not do the same with this new $400 billion that they've done with every other dollar they ever came across'
​
yeah... unlikely....
FININCIALLY_REGARDED t1_jdh3pvb wrote
Throw some gas? We need a fire hose that sprays gas.
thedarkbestiary t1_jdjz893 wrote
"That $400 Billion helicopter is an investment that will pay for itself"
Artistic_Data7887 t1_jdffz47 wrote
But it’s just a “one year loan”
ricozuri t1_jdgqpsg wrote
Sure it is, until it’s renewed in March 2024…
nova_demosthenes t1_jdf71jb wrote
Yep. No /s
hiricinee t1_jdffr20 wrote
He can do this on 2 fronts- qe to the banks while making lending to consumers and businesses more expensive.
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Gandalfs_Shaft48 t1_jdf6vag wrote
THE BANKING SYSTEM IS SOUND AND RESILIENT AND STRONG AND SOUND!!!
KnowledgeableSloth t1_jdf9cii wrote
It's a Ponzi Scheme
Pmartinez8241 t1_jdfo656 wrote
Instead of continuing to make hard earned money ... can I get some of that money from the INFINITE SUPPLY that the fed has?
DeEfDubChris t1_jdfwby7 wrote
Pleading-Orange168 t1_jdfdru7 wrote
And resilient.
Cmor1787 t1_jdfgdit wrote
And strong
lilsneezey t1_jdfksrn wrote
And sound
Responsible_Key1232 t1_jdfl8h9 wrote
And !!!
HuskyNotPhatt t1_jdfph6i wrote
And!!!
lilsneezey t1_jdfwa13 wrote
Aaaand smoking the reefer?
WorkingCorrect1062 t1_jdg682t wrote
Aaand it’s gone
[deleted] t1_jdgi0o9 wrote
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Mega-Lithium OP t1_jdfd4ok wrote
QE or Quantitative Easing was an experiment by Federal Reserve Chairman Ben Bernanke after the 2008 Great Financial Crisis.
Prior to that, they tried dropping the Federal Reserve Rate to 0%. It didn’t work.
So, they decided to give the Too Big To Fail banks an obscene amount of money in hopes they would lend it to people and jumpstart the economy. They did this by buying financial assets FROM the banks.
Did the banks start making loans? Of course not!
They started betting on the assets they they just sold to the Fed. THEY PAID THEMSELVES BONUSES AND bought the financial assets that they knew the Federal Reserve was trying to raise the value of.
There were protests, remember the 99% marches on Wall Street?
so QE is this shitshow and QT is the opposite (Quantitative Tightening) where the Federal Reserve sells or allows assets to run off the balance sheet.
Remember that 2.8 Trillion of the 8.7 Trillion is MBS or Mortgage Backed Securities (the dogshit Jenga tower from “the Big Short”) and that Fannie Mae & Freddie Mac have been nationalized (aka a 14 year “Conservatorship “ ) since then.
So Jay Pow raised the fed rate by .25 (to not spook markets) while SIMULTANEOUSLY pumping $400 billion into banks via this scumbag scheme called QE
What does this mean?
I have no idea, I’m just some dude on Reddit
Edit- removed stuff about the tea party. Not essential
AlPCurtis t1_jdfdufd wrote
“Bro that’s nuts” - I say as I impatiently wait for you to pass the bong.
ShepherdofSushi t1_jdfmutv wrote
Best comment I’ve read all day… passes you the bong… as I’ve been on Reddit for nearly 5 hours now
moondawg8432 t1_jdfjtqt wrote
Great post except the tea party part. We were on your side. We wanted the government and the Fed to stop bailing out banks and wallstreet.
BooBeef t1_jdfqtn2 wrote
Tea Party Republicans were the opposite of what you said, they didn’t want the fed to be bailing out banks… unlike the moderate republicans and democrats who have no spines
Longjumping_Yam_5230 t1_jdfugn7 wrote
You can be against regulations and bailouts.
lllllIllIllIll t1_jdfz5s5 wrote
Uh the Tea Party republicans were the ones that were pissed off about the bankers
Mega-Lithium OP t1_jdg2afv wrote
Fair. Removed it
Mega-Lithium OP t1_jdg1u3a wrote
Until the bankers started funneling profits into their reelection campaigns
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DYTTIGAF t1_jdf96t0 wrote
The Federal Reserve has no discipline. One reaction regardless of the problem: just throw money at it.
Doesn't matter if it's a banking crises, or a virus, or unemployment, or fraud, or economic downturn, etc.
They are a one trick pony that backs up the truck and fills it with cash. Next takes it to the helicopter to dump it on whatever problem that requires a thoughtful solution.
It will work (until it doesn't). No free lunches...and the check is now on the table.
Who's gonna pick it up? Taxpayers.
Mega-Lithium OP t1_jdf9j84 wrote
Inflation is going to moon!
Waterfish3333 t1_jdh14ty wrote
I think there was a country in South America that tried this too? Can’t remember, think it starts with a V? Their currency now is literally worth less than monopoly money.
groupfox t1_jdhszdo wrote
Except half of the world keeps their assets in dollars, not V-dollars. So we can have printers go brrrr for a long, long time. Until we can’t.
Waterfish3333 t1_jdhvahh wrote
Yea… it’s that last sentence that scares the hell out of me.
groupfox t1_jdhvq1n wrote
Go get yourself second citizenship. Just in case, you know.
BlahblahOMG60 t1_jdksg14 wrote
True, but for how much longer ?
the_shalashaska t1_jdkby4v wrote
Ok, got it. You’re vouching for the same “let ‘em die” policies that led to the Great Depression and GFC.
You don’t understand the entire concept of fractional reserve banking is built on simple trust…trust that you will get paid back. When that trust goes away, everything falls apart.
The only way to maintain that trust is to print print print. There is no other way this system survives. Once you realize that, you just ride the waves.
DYTTIGAF t1_jdklkcg wrote
No. You don't get it. Accepting fraud and poor management of customers capital is not something that should be accepted as good behavior.
"Riding the waves" of incompetence is something I just need to accept? Please explain to me where did you come up with such brilliant insight? A child thinks this way.
You logic suggests the underlying currency (the US Dollar) can withstand a perpetual train of corruption without investors every questioning its value and stability. We should just ignore common sense because things will just magically fix themselves? Good luck with your thesis.
BlahblahOMG60 t1_jdks0aa wrote
Excellent point. I wonder if this is the beginning of the end of the dollar as a world reserve currency 🫣
Longjumping-Hair4691 t1_jdfbysv wrote
Can someone explain to me what’s going on? I do not know any of the terminology all of you use. Should an average blue collar guy like me worry about what’s going on? Also, what’s up with you guys and Wendy’s?
Mega-Lithium OP t1_jdffjcy wrote
The Federal Reserve since 2008 has stuffed an 8.7 Trillion dollar warehouse full of shit they bought from the “Too Big To Fail” banks.
That shit is MBS (mortgages), Bonds and other financial instruments
In exchange, the banks got sweet, sweet cash they they were supposed to lend to everyone so we could buy cars, houses, start businesses and send our kids to college.
They lent some out the back door but also operated a gambling operation out the back door. Shady.
When Covid hit, they pumped so much money into the bloodstream of the economy that weird shit started happening. Companies that should have failed were kept afloat (zombies) People’s houses exploded in value and with zero rates they could refinance and buy a bunch of useless shit. That’s when your fellow Wall Street bets pals were trading GameStop with their magical internet money and using it to buy lamb is and monkey pics.
But, inflation started to accelerate. Basic law of economics is that when you shoot money out of tshirt cannons into the economy, prices for everything goes up.
To fight that, the federal reserve started making it more expensive to borrow money (raising the fed rate or “hiking”) They also started QT (selling shit from their warehouse)
which also has the nasty effect of breaking shit which is why Silicon Valley took the dirt nap.
In a panic, they started the whole QE thing again.
And…here we are
ointw t1_jdfzn5y wrote
About QT, Fed didn’t sell anything, they just let bonds expired by keeping to maturity date.
Mega-Lithium OP t1_jdg1ykk wrote
True
Yasai101 t1_jdh4xod wrote
You forgot the Wendy's tho.
tslGUH t1_jdh7xy9 wrote
Most of that $8.7 trillion is not MBS
Mega-Lithium OP t1_jdhgf7a wrote
Yes, around 2.6 Trlllion of it
https://fred.stlouisfed.org/series/WSHOMCB
Remember that the entire QE thing was supposed to be a very short term emergency fix back in 2010.
Ben Bernanke then Janet Yellen and now Jerome Powell have kept this thing going.
And, I interestingly, the GSEs (Fannie Mae & Freddie Mac) have been in “conservatorship” for 14 years!!! When do they just call that a nationalization?
They pumped liquidity into the economy and Blackstone private equity swallowed up all the houses.
Why?
So we are a nation of “have nots” and renters
nasty_nater t1_jdhlsmv wrote
Literally just watched the HBO movie Too Big To Fail.
Wonder if the producers knew they would just continue doing this shit more than 10 years later…
Mega-Lithium OP t1_jdhp6ll wrote
Watch list:
The Big Short Too Big To Fail FRONTLINE- The age of easy money
EstablishmentFree611 t1_jdfdbsk wrote
An entire year of quantitive tapering erased in a week. Aka inflation back up reset to last year.
ChEChicago t1_jdff5ag wrote
If by year you mean 5-6 months, then yea
BigBeagleEars t1_jdfjkif wrote
If by beer you mean 5 or 6, then yea, make it a dozen
inaudible_scream t1_jdgo1wr wrote
flyingsolo07 t1_jdgtaoh wrote
Based of the data from the last 6 months, it will take exactly 1 quarter to erase all this newly printed money, it's not doom and gloom like you guys make it out to be
clownfeat t1_jdip79d wrote
Oh shit is it tapering? I thought the T stood for tightening. I'm regarded.
clownfeat t1_jdipfyu wrote
Edit: They're two different things. Tapering happens between Tightening and Easing, and QT does refer to tightening. The more you know.
EstablishmentFree611 t1_jditygj wrote
Tapering is the selling of bonds mbs etc which in effect tightens and quantity easing is when they buy them to increase liquidity.
chickennoobiesoup t1_jdfqxt2 wrote
This is a pretty good description: What’s wrong with the banks https://www.economist.com/leaders/2023/03/16/whats-wrong-with-the-banks
[deleted] t1_jdgijq0 wrote
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Longjumping-Hair4691 t1_jdjm665 wrote
Thanks everyone for taking time to answer.
Malamonga1 t1_jdfwp6x wrote
Powell : "it's not the same as QE because QE has a downward effect on long term interest rate while this only serves to improve liquidity"
10 year interest rate in the last 20 days : down 0.7% from 4.1% to 3.4%.
On the other hand, the amount of increase on the Fed balance sheet just proves how many small/mid size regional banks are in deep shit.
Orbidorpdorp t1_jdi2jf5 wrote
Down 0.7 percentage points, or 17%.
readonlypdf t1_jdfa0bh wrote
Fucking someone destroy the money printer.
BuyLowThenSellLower t1_jdinivd wrote
Maybe just turn it down, but then instead, make it so money creation is only done by giving people negative tax rates that pays then money, and a inverse progressive system where the poor get back more negative taxes than the higher earners would.
I think this would then actually stimulate the economy
captmorgan50 t1_jdfu6m9 wrote
Orginal TARP was 750B and took lots of discussion and a congressional vote. Now they spend 400B on a Sunday and it isn’t even discussed on Monday
crash41301 t1_jdfyxzf wrote
Good point. That means the scale of what was to come was likely very similar to 2008. I hope the wind don't blow too hard
neutralpoliticsbot t1_jdgadbs wrote
That is over $1 trillion in 2023 dollars though
pitviperinvesting t1_jdf6xm0 wrote
🤡🤡
domomymomo t1_jdfvym1 wrote
Sometimes is better for the economy to let failed companies to die off and let newer and smarter ones to take its place.
MediocreX t1_jdgnodm wrote
It's the Darwin way
Zestyclose_Meet1034 t1_jdfznu6 wrote
I know we joke but that’s pretty close to an end of an entire empire soon enough
hogujak t1_jdfcruh wrote
Fire jpow
justanotherguy719 t1_jdiux3a wrote
If they all happened to croak at the same time I think the world would be a better place.
Accomplished-Heat301 t1_jdfp41u wrote
Quantitative tightening has turned out to be a complete joke. They're stimulating the economy while tightening interest rates at the same time.
beavisbutts t1_jdf7xz3 wrote
nothing to see here folks. move along. move along. I SAID MOVE ALONG!!!
192838475647382910 t1_jdf6yez wrote
Everyone calm dooown.. this is fine… FED safe, banks safe… eeeasy now… keep it movin…
Mega-Lithium OP t1_jdf8n4k wrote
Effectively a $400 billion dollar money drop
PharmDinvestor t1_jdfeohx wrote
How many times will this be posted ?
loobear2357 t1_jdgaq6g wrote
People like to talk about the same thing for months on end in financial markets
hapimaskshop t1_jdh98ag wrote
Like money. ALWAYS WITH THE MONEY! Never see people talk about a bird’s wonderful blue plumage or anything else but money here.
loobear2357 t1_jdhddex wrote
They only talk about options the most degenerate way to invest
Distinct_Nectarine78 t1_jdft5rk wrote
This looks similar to my weight loss journey. One more pizza wouldn't hurt would it.....
Correct_Degree_2480 t1_jdggszk wrote
I mean you can only absorb so many calories in a day….right?
Rang_Dipkin t1_jdfx5jo wrote
Someone needs to tell them this isnt how you do QT
ImFedUpWithItAll t1_jdg6za1 wrote
Feeling QT, might ease later
hellish0098 t1_jdf8x2g wrote
🤡🤡🤡🤡🤡 let’s raise rates by 1% JP…!! Print print print, we can get to 1T!
arpatel530 t1_jdfqxij wrote
We will just print forever. Inflation will stay forever. AI will pump the 7 main stocks and indices will be saved.
[deleted] t1_jdfbg3b wrote
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2Hours2Late t1_jdfbi9g wrote
Hit it with some flavor BAM
danielthelee96 t1_jdg2lk9 wrote
Just imagine CPI/PPI in a couple of months 😂😂😂😂
12zoro t1_jdgexov wrote
They could get the money down by only 400b before things started breaking lol. By this time next year, the balance sheet will be around 12T just to keep things steady and then we zoom to hyperinflation
VisualMod t1_jdf6738 wrote
The Federal Reserve's total assets grew by $400 billion in the week ending March 22, 2023, to a record high of $8.73 trillion. The central bank's holdings of Treasuries and other government-backed securities rose by $300 billion during the week, while its holdings of mortgage-backed securities increased by $100 billion.
Otherwise-Arm3245 t1_jdfb9ml wrote
😂 inhad a chuckle
Mega-Lithium OP t1_jdfhcp3 wrote
TLDR Banks always win
IAT (iShares Regional Bank ETF) or VFH (Vanguard Financials ETF)
inthemindofadogg t1_jdfm20b wrote
So DPST?
Shamrock3546 t1_jdfjn5x wrote
Show liabilities regard
VinnyEnzo t1_jdgnh3b wrote
165 million eligible working people could've gotten a $2500+ stimulus check with that money and let a few shit banks fail in the mean time.
TVanTheMan636 t1_jdgspt3 wrote
I’m no chart expert… but I think we’re all going to be LIVING IN A VAN, DOWN BY THE RIVER!!
jedoeri t1_jdi3kbl wrote
Dude I been saving my entire life to essentially just have that, we're just gonna be down by the river holmes.
REGARDED_INVESTOR t1_jdhp4e7 wrote
perfectly normal, perfectly healthy
TheHamburgler8D t1_jdk0pty wrote
TLDR; buy gold… bc the fed made sure as shit you can’t buy crypto
VisualMod t1_jdf66g5 wrote
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gwilson4562 t1_jdfl63p wrote
FRED more like we’re in the RED
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Randomsomedude t1_jdfo4p2 wrote
We just getting started
[deleted] t1_jdfqdyh wrote
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Dark_Tint t1_jdfqf90 wrote
You haven’t seen anything yet
bbmak0 t1_jdfxb6v wrote
400b so far, and I see there is a support level on 8339, and it looks like Fed's ass is going back above to 9000
Mega-Lithium OP t1_jdfxihe wrote
https://fred.stlouisfed.org/series/RRPONTSYAWARD
Don’t fear the Repo
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[deleted] t1_jdfzpat wrote
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ejohns19 t1_jdg4ys2 wrote
Can you expand this to like 20 years? Thanks
Intelligent_Oil86 t1_jdg5ysm wrote
Wasn't the BFTP a separate facility and not related to their balance sheet?
versello t1_jdg6ay9 wrote
Wasn’t it $300 billion last week?
neutralpoliticsbot t1_jdga0xa wrote
Them just bagholding is a lot less inflationary than just sending people checks. This is way better.
People got those $1,200 checks and ran straight to the car dealerships
Ductard t1_jdgawi7 wrote
How do we make money from fed balance sheet to the moon?
Alien8w8 t1_jdge0vg wrote
But but but..... it wasn't a bail out and QE was done.
Fucking pretend rich people...
[deleted] t1_jdggz24 wrote
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player89283517 t1_jdgh8zc wrote
Fed’s gotta sell more shit
Dosmastrify1 t1_jdghoe5 wrote
IT SAYS FRED NOT FED!
nyse125 t1_jdglaw5 wrote
We've known about why this uptick is in the chart and Jpow even clarified for the idiots who are still clueless about it during the fomc meeting. Basically, with BTFP, they're lending short term liquidity to banks to cover deposits if need be. The balance sheet will go down a year from now as QT is still in play.
Mega-Lithium OP t1_jdgszh9 wrote
BTFP is just made up nonsense like QE. It’s money printing
Jerome Powell is a conservative republican who was appointed by Trump.
He has deep ties to Wall Street
nyse125 t1_jdguujz wrote
And trump threatened to fire him multiple times back in 2019 when he didn't cut rates
The government does not interfere with the fed and the rest are conspiracies
Allaroundlost t1_jdgpqhu wrote
FRED = Fucking Rediclous Economic Disaster
Mega-Lithium OP t1_jdgt9u6 wrote
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Lure852 t1_jdh1sgg wrote
Love that X - axis!
chriztuffa t1_jdh8dkp wrote
Bullish?
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Poopoopeepeepuke t1_jdhcmi6 wrote
Milk $20 a gallon coming to a store near you. Good thing stealing less than $900 is only a misdemeanor in California. Walmart might have to start feeding my family if things don’t get better soon.
cwaters727 t1_jdhheip wrote
Hahaha I love tim dillon
Sea-Sherbert3338 t1_jdht6q0 wrote
I might be regarded but how did the “25 billion” BTFP fund turn into 400 billion in 2 weeks???
rickylong34 t1_jdhvmgw wrote
Nerds explain how printing money isn’t inflationary
RCB1424 t1_jdidv7f wrote
Think there’s resistance at like 8.8T or so. Can resume downtrend if it fails there.
Crazy_Beat_36 t1_jdjb7ft wrote
It’s like me and my credit cards or me and my thinkorswim account or me and my casino card. Am I regarded?
erednay t1_jdf6jk8 wrote
Thank you for your diligent work fighting inflation, Mr. Powell.