Posted on 07/14/2023 6:53:32 AM PDT by Kaiser8408a
What screams may come! Actually, the aftermath of excessive monetary policies under Bernanke, Yellen and Powell are coming home to bit the big banks.
Interest expenses at big US banks are rising much more quickly than interest income. Across the six largest US banks, interest expenses are set to climb to roughly $78.7 billion from $15.5 billion in the same period last year.
There is still $8.3 Trillion in monetary stimulus sloshing around the monetary system.
The Fed played a game. And is still playing!!
(Excerpt) Read more at confoundedinterest.net ...
Do we need a FED?
Interest rates should reflect the rates of price increases.
If Walmart and its suppliers raise prices by 8% interest rates should be around 8% plus about 2% (10% total) to adjust for income taxation on interest.
Markets are higher now than before the fed rate increases.
All the gop and dem covid cash is still out there and pumping the markets and the rest of equities.
Interest can be partially added to principal.
If the basic mortgage interest rate is say 7%, the mortgagors might pay 4% and have 3% added to the principal annually.
The federal debt is not self-amortizing.
When say prices and wages have doubled, which might be 10 years out, the mortgagors can pay the whole 7% and their mortgage can become self-amortizing.
This is good news for mom and pop who keep their money in CDs.
“Interest Expenses Soar At Big Banks As Fed Tightens Money”
I know of no US bank that pays interest rates on CDs that keeps up with inflation.
Bank depositors lose buying power on their deposited funds each and every year.
When Biden’s digital dollar is the thing you’ll have no money
According to Dr. Milton Friedman the FED's job is to control money supply, not tinker with interest rates.
“This is good news for mom and pop who keep their money in CDs”
No it’s not.
Maybe better than nothing, but consider the tax of Inflation combined with Income Taxes.
The Fed loved to help Br0nc0 and hurt Trump.
Quotes from Wikipedia:
The 1907 panic began with a stock manipulation scheme to corner the market in F. Augustus Heinze’s United Copper Company.
On Monday, October 14, he began aggressively purchasing shares of United Copper, which rose in one day from $39 to $52 per share. On Tuesday (Oct. 15), he issued the call for short sellers to return the borrowed stock. The share price rose to nearly $60, but the short sellers were able to find plenty of United Copper shares from sources other than the Heinzes. Otto had misread the market, and the share price of United Copper began to collapse.
The stock closed at $30 on Tuesday and fell to $10 by Wednesday (Oct. 16). Otto Heinze was ruined.
By the weekend after the failed corner, there was not yet systemic panic. Funds were withdrawn from Heinze-associated banks, only to be deposited with other banks in the city.
Because of past association with Charles W. Morse and F. Augustus Heinze, on Monday, October 21, the board of the Knickerbocker asked that Barney resign (depositors may have first begun to pull deposits from the Knickerbocker on October 18, prompting the concern). That day, the National Bank of Commerce where J.P. Morgan was a dominant factor, announced it would not serve as clearing house for the Knickerbocker. On October 22, the Knickerbocker faced a classic bank run. From the bank’s opening, the crowd grew. As The New York Times reported, “as fast as a depositor went out of the place ten people and more came asking for their money [and the police] were asked to send some men to keep order”. Two van loads of notes were quickly unloaded, yet even this failed to calm the panic stricken depositors.
Morgan and his associates examined the books of the Knickerbocker Trust and decided it was insolvent, so they did not intervene to stop the run. Its failure, however, triggered runs on even healthy trusts, prompting Morgan to take charge of the rescue operation. On the afternoon of Tuesday, October 22, the president of the Trust Company of America asked Morgan for assistance. That evening Morgan conferred with George F. Baker, the president of First National Bank, James Stillman of the National City Bank of New York (the ancestor of Citibank), and the United States Secretary of the Treasury, George B. Cortelyou. Cortelyou said that he was ready to deposit government money in the banks to help shore up their deposits. After an overnight audit of the Trust Company of America showed the institution to be sound, on Wednesday afternoon Morgan declared, “This is the place to stop the trouble, then.”
As a run began on the Trust Company of America, Morgan worked with Stillman and Baker to liquidate the company’s assets to allow the bank to pay depositors. The bank survived to the close of business, but Morgan knew that additional money would be needed to keep it solvent through the following day. That night he assembled the presidents of the other trust companies and held them in a meeting until midnight, when they agreed to provide loans of $8.25 million to allow the Trust Company of America to stay open the next day. On Thursday morning Cortelyou deposited around $25 million into a number of New York banks. John D. Rockefeller, the wealthiest man in the United States, deposited a further $10 million in Stillman’s National City Bank. Rockefeller’s massive deposit left the National City Bank with the deepest reserves of any bank in the city. To instill public confidence, Rockefeller phoned Melville Stone, the manager of the Associated Press, and told him that he would pledge half of his wealth to maintain U.S. credit.
Morgan, Stillman, Baker and the other city bankers were unable to pool money indefinitely.
Although calm was largely restored in New York by Saturday, November 2, yet another crisis loomed. One of the exchange’s largest brokerage firms, Moore & Schley, was heavily in debt and in danger of collapse. The firm had borrowed heavily, using shares of the Tennessee Coal, Iron and Railroad Company (TC&I) as collateral. With the value of the thinly traded stock under pressure, many banks would likely call the loans of Moore & Schley on Monday and force an en masse liquidation of the firm’s stock. If that occurred it would send TC&I shares plummeting, devastating Moore and Schley and triggering further panic in the market.
To avert the collapse of Moore & Schley, Morgan called an emergency conference at his library Saturday morning. A proposal was made that the U.S. Steel Corporation, a company Morgan had helped form through the merger of the steel companies of Andrew Carnegie and Elbert Gary, would acquire TC&I. This would effectively save Moore & Schley and avert the crisis.
At 3 a.m. about 120 bank and trust company officials assembled to hear a full report on the status of the failing trust companies. While the Trust Company of America was barely solvent, the Lincoln Trust Company was probably $1 million short of what it needed to cover depositor accounts. As discussion ensued, the bankers realized that Morgan had locked them in the library and pocketed the key to force a solution, the sort of strong-arm tactic he had been known to use in the past. Morgan then entered the talks and advised the trust companies that they must provide a loan of $25 million to save the weaker institutions. The trust presidents were still reluctant to act, but Morgan informed them that if they did not it would lead to a complete collapse of the banking system. Through his considerable influence, at about 4:45 a.m. he persuaded the unofficial leader of the trust companies to sign the agreement, and the remainder of the bankers followed. Having received these commitments, Morgan allowed the bankers to go home.
....one obstacle remained: the anti-trust crusading President Theodore Roosevelt, who had made breaking up monopolies a focus of his presidency.
Frick and Gary traveled overnight by train to the White House to implore Roosevelt to set aside the application of the Sherman Antitrust Act and allow—before the market opened—a company that already held a 60% share of the steel market to make a large acquisition. Roosevelt’s secretary refused to see them, but Frick and Gary convinced James Rudolph Garfield, the Secretary of the Interior, to bypass the secretary and arrange a meeting with the president. With less than an hour before the Stock Exchange opened, Roosevelt and Secretary of State Elihu Root began to review the proposed takeover and appreciate the crash likely to ensue if the merger was not approved. Roosevelt relented....When news reached New York, confidence soared. The Commercial & Financial Chronicle reported that “the relief furnished by this transaction was instant and far-reaching”. The final crisis of the panic had been averted.
In May 1908, Congress passed the Aldrich–Vreeland Act, which established the National Monetary Commission to investigate the panic and to propose legislation to regulate banking.
Aldrich convened a secret conference with a number of the nation’s leading financiers at the Jekyll Island Club, off the coast of Georgia, to discuss monetary policy and the banking system in November 1910.
The final report of the National Monetary Commission was published on January 11, 1911. For nearly two years legislators debated the proposal, and it was not until December 23, 1913, that Congress passed the Federal Reserve Act. President Woodrow Wilson signed the legislation immediately, and the legislation was enacted on the same day, December 23, 1913, creating the Federal Reserve System.
https://en.wikipedia.org/wiki/Panic_of_1907
“According to Dr. Milton Friedman the FED’s job is to control money supply, not tinker with interest rates.”
The “Reserve” part of its name indicates the proper function of the Federal Reserve.
The Federal Reserve might be limited to lending money (at say an interest rate of 1.5 times the last 12 months inflation rate) to the federal government, state governments and federally insured banks. The Federal Reserve money would because of its high rate of interest merely function as a reserve.
“The Fed loved to help Br0nc0 and hurt Trump.”
Mortgage rates were dirt cheap in 2020. So cheap that house prices were sent soaring.
“The Fed has to raise rates to prevent disastrous impacts,”
The Federal Reserve can stabilize the dollar, but the housing market is overstimulated by the stock market and the Federal Reserve can no longer reign in the stock market. Leading companies now have the product & service pricing power to maintain their stock prices.
Last year it was nothing and the banks made out. Most dont shop and use HYSA or market investment The banks took their sweet time before raising rates and thereby screening mom and pop.
You are correct. I work at one of the big multi-national banks.
(When Biden’s digital dollar is the thing you’ll have no money)
Yep
And yet I still run into a few people who think that the Mark of the Beast will not come.
It absolutely WILL come to the world 🌎🌍 and it will be the most dramatic time in human history.
(lurkers please click on my screenname to see my FR homepage for more information)
Matthew 24:15-22
English Standard Version
The Abomination of Desolation
15 “So when you see the abomination of desolation spoken of by the prophet Daniel, standing in the holy place (let the reader understand), 16 then let those who are in Judea flee to the mountains. 17 Let the one who is on the housetop not go down to take what is in his house, 18 and let the one who is in the field not turn back to take his cloak. 19 And alas for women who are pregnant and for those who are nursing infants in those days! 20 Pray that your flight may not be in winter or on a Sabbath. 21 For then there will be great tribulation, such as has not been from the beginning of the world until now, no, and never will be. 22 And if those days had not been cut short, no human being would be saved. But for the sake of the elect those days will be cut short.
Daniel 9:27
English Standard Version
27 And he shall make a strong covenant with many for one week,[a] and for half of the week he shall put an end to sacrifice and offering. And on the wing of abominations shall come one who makes desolate, until the decreed end is poured out on the desolator.”
https://www.biblegateway.com/passage/?search=Matthew%2024%3A15-22%2CDaniel%209%3A27&version=ESV
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