Federal Reserve Raises Interest Rates By 25 Basis Points

[Toddsterpatriot]

So long as you still exist.

You got the loan. Why wouldn't you exist?

 

[Missouri_Mike]

Consumer expenditures rose to an all time high after the pandemic.

As a result in the spike of spending and consumerism, the number of shipping containers and the number of container ships at our California ports surged tremendously to record highs. This overwhelmed the system.

It was simply the government going on a credit card spree. Of course they could pay people worth 300 bucks a week to work a thousand a week to stay home. And yes they bought more stuff. It’s socialism on a fast track. Without the slave labor portion. For now.

 

[g5000]

You got the loan. Why wouldn't you exist?

How big a loan do you think Citibank needs to cover all their uninsured deposits?

I just did a quick check, and Citibank has $300 billion in deposits.

According to the chart in post 2, $222 billion of those deposits are uninsured.

Do you think Citibank got a $222 billion loan? I don't.

Do you think they have $222 billion of collateral, even at par value? I don't.

And that's just ONE bank.

 

[CrusaderFrank]

I subscribe to a lot of newsletters, and some of them are financial. One of my favorites is from John Mauldin.

His latest newsletter has some very interesting charts.

Remember how Silicon Valley Bank had a lot of depositors whose accounts were a gajillion dollars over the FDIC insured amount?

Well, the US government made those depositors whole anyway.

Talk about moral hazard!

So check out this chart of even bigger banks whose uninsured deposits exceed their insured deposits. The percentages may be hard to read, but for example, Citibank's uninsured deposits are 74 percent of total deposits!

Meh, it's just another few trillion they'll have to print. Not like that's inflationary or anything

Slava Ukraine!

 

[multivita-man]

Meh, it's just another few trillion they'll have to print. Not like that's inflationary or anything

Slava Ukraine!

Ukraine funding is a drop in the bucket, cum wipe.

 

[Toddsterpatriot]

It all depends on how diversified a bank's bond holdings are. I used half just as an illustration.

But for a real world example, the yield on a July 2020 ten year Treasury is 0.59 percent. The yield on a November 2022 ten year note is 3.82 percent.

If you are holding that July 2020 note, no one is buying unless you sell at a huge loss.

Half? At least.

But for a real world example, the yield on a July 2020 ten year Treasury is 0.59 percent.

The current yield is 3.526%, the coupon is 0.625%

If you are holding that July 2020 note, no one is buying unless you sell at a huge loss.

Half? At least.

The current bid is 81.25

 

[CrusaderFrank]

Janet Yellen recently mentioned that "It's a global transition for which we have an estimated price tag: some have put the global figure between $100 and $150 trillion over the next three decades. At the same time, addressing climate change is the greatest economic opportunity of our time." Nov 3, 2021

Yeah, climate change

Riiiiiiiiiiiiight.

 

[CrusaderFrank]

Ukraine funding is a drop in the bucket, cum wipe.

$100B is a drop in the bucket.

LOL

See why EVERY Progressive run economy eventually devolves into an uber wealthy political class and slaves, Slave?

 

[Toddsterpatriot]

I am referring to the giant spike at the Fed discount window. A whole lot of banks are borrowing a fuck ton of money from the Fed.

More than even during the Great Recession.

Even more frightening is that the Fed is not imposing their usual haircut for their loans to the banks. Usually, the Fed lends less than the collateral is worth. In the present situation, they are actually lending MORE than the collateral is worth!

This is a shadow bailout.

If the banks borrowing money default, the Fed will take a huge loss.

Even worse, the Fed's portfolio is already chock full of trillions of dollars of interest rate risk. To bring down inflation, they will have to sell big chunks of their portfolio at a loss.

The banks are obviously borrowing money because they have astronomical sums of deposits which are not insured. See the chart in post 2.

If America gets spooked and begins a run on the banks, the banks need to be capitalized well above their normal capital reserves.

Thus the wild borrowing.

A whole lot of banks are borrowing a fuck ton of money from the Fed.

$80 billion?

More than even during the Great Recession.

What numbers are you looking at? Link?

 

[Toddsterpatriot]

How big a loan do you think Citibank needs to cover all their uninsured deposits?

I just did a quick check, and Citibank has $300 billion in deposits.

According to the chart in post 2, $222 billion of those deposits are uninsured.

Do you think Citibank got a $222 billion loan? I don't.

Do you think they have $222 billion of collateral, even at par value? I don't.

And that's just ONE bank.

Do you think they have $222 billion of collateral, even at par value? I don't.

Their balance sheet, in December, showed $227 billion in Treasuries, $11 billion in state and muni bonds, $103 billion in MBS, $177 billion in "other securities", $319 billion in "other investments".

 

[multivita-man]

$100B is a drop in the bucket.

LOL

See why EVERY Progressive run economy eventually devolves into an uber wealthy political class and slaves, Slave?

What's our GDP, cock gobbler?

 

[toobfreak]

Our banking system is not going to be nationalized.

Remember you told me that when it happens.

One of the newsletters I subscribe to said this signals the end of Silicon Valley, though.

Chalk another one up for the Gipper.

 

[Missouri_Mike]

How big a loan do you think Citibank needs to cover all their uninsured deposits?

I just did a quick check, and Citibank has $300 billion in deposits.

According to the chart in post 2, $222 billion of those deposits are uninsured.

Do you think Citibank got a $222 billion loan? I don't.

Do you think they have $222 billion of collateral, even at par value? I don't.

And that's just ONE bank.

I think you’re really proving the move from the gold standard was and is a disaster. And the FED is a fucking joke.

 

[Missouri_Mike]

Remember you told me that when it happens.


Chalk another one up for the Gipper.

View attachment 768355

Our banking system will be nationalized soon. There’s no other way to keep the funny money with no real value going.

 

[g5000]

I think you’re really proving the move from the gold standard was and is a disaster. And the FED is a fucking joke.

Before we went off the gold standard, recessions and depressions were more frequent, longer lasting, and deeper.

See for yourself: List of recessions in the United States - Wikipedia

Those countries which went off the gold standard the soonest, came out of the Great Depression the soonest.

 

[Nobody911]

Fed itself always fed big fish. Yeah, they let small one die & eat them. Yummy! It's their nature... Fed's a powerful tool for ruling elites. Yeah, keep making Benjamin Franklin on the dollar bill look like the hottest model in the universe! lol.

Well, when it comes to bank deposits, it's important to be aware of the risks involved. Although banks are generally considered safe and reliable for keeping your money, there is always a chance that they could fail.

This risk can be minimized by keeping your deposits within the FDIC insurance limit of $250,000 per depositor, per insured bank. It's also important to pay attention to the financial health and stability of the bank where you hold your deposits.

One sign of a healthy bank is when they have consistent profits and strong capital reserves. In addition, consider diversifying your deposits across multiple banks rather than placing all your money in one institution.

While no deposit is completely risk-free, being informed and taking precautions can help mitigate potential losses in the event of a banking crisis or failure.

 

[1srelluc]

See that chart in post 2.

74 percent of Citibank's deposits are not insured.

Another woke anti-2A bank....No shits given....Maybe they can take BoA and Wells Fargo with them.

It would be incumbent upon every depositor to see what their banks donate to.....If they are donating to the leftists then eject because because common sense dictates that any bank investing in the left is likely risking your money in SVB type ventures and are more concerned with "equal outcomes" and other such tripe than the depositor.

 

[Tom Paine 1949]

What do you make of the spike of borrowing at the discount window?
My spidey senses tell me someone is taking advantage of the cheap money while the cheating is good.
Either that, or things are REALLY bad.

I just did a quick check, and Citibank has $300 billion in deposits.
According to the chart in post 2, $222 billion of those deposits are uninsured.

Do you think Citibank got a $222 billion loan? I don't.

Do you think they have $222 billion of collateral, even at par value? I don't.

And that's just ONE bank.

With all respect, I think you misunderstand the nature and purpose and likely use of the discount window, which Citibank wouldn’t touch with a ten foot pole. This is not “free money.” It is not even “cheap money” — regardless of the temporary valuation model used for necessary bank collateral.

The interest being charged to the banks for these emergency Fed loans is around 4.75%. As soon as the temporary liquidity problems of these mostly smaller and mid-size banks ends, they will rush to pay them off, just as your charts show they did after 2009 and after the Covid crisis. The banks have much cheaper access to capital from their depositors. (The FDIC issue is entirely different, as are other issues like the leverage of giant unregulated hedge funds that conceivable may threaten even “too big to fail” institutions.)

Below is a different take on the “discount window” emergency loans from an expert who has (imo rightly) all along opposed the “easy credit” and QE policies of the past. He points out that there is plenty of cheap, almost “free money” available especially to the biggest banks from private and business depositors, which circulates through the financial system as a whole.

In passing, I note that the Fed under its present Chairman refused to go along with Trump’s calls to move to ZIRP. He also has been doing his best to hold the line against speculative market traders and banks that want to return to artificially low interest rates.

I think Powell, though a banker’s banker, is trying to correct serious problems in the system, having at least subliminally understood that we are now in a very different era than before Covid, when there was the credible fear of deflation (even as many trillions in money & credit were pumped into the system).

We are in a new economic era, in large part due to a significant decoupling of trade due to the Cold War with China and a hot one in Europe, and huge logistic and production challenges. This has put an end to the remarkable era of super low inflation we experienced for many decades after unions were busted and production and trade became ever more globalized, while the U.S. dollar remained strong and essentially unchallengeable.

***

From Wolf Richter:

“Banks have $17 trillion in deposits. Much of it is commercial checking accounts that pay 0%. And the national average for savings accounts (Feb) is 0.35%…. All the big banks — they hold the majority of deposits — are close to 0% with their savings account interest. Banks offer some brokered CDs … at 5% but that’s a minuscule portion of their deposits.

As the panic settles down, you will see bank borrowing at the Fed plunge because this is A BAD DEAL FOR BANKS. It keeps them alive, and that’s why they’re borrowing, but as soon as they can, they pay back those loans. Looks at the chart, how it plunged the last two times!!!

 

[DudleySmith]

One of the newsletters I subscribe to said this signals the end of Silicon Valley, though. Cheap, easy VC money has completely dried up.

I worked there for a couple of years. It is really Silly Con Valley. They blew away obscene amounts of money on vaporware over the years. Still do.

 

[DudleySmith]

think you’re really proving the move from the gold standard was and is a disaster. And the FED is a fucking joke.

That is what I think to be the case, and it gets proven true many times since the invention of CD's in the 1960's, allowing banks to buy deposits and speculate with the money.

AS for the Fed, it's board of Directors doesn't inspire me in the least with their backgrounds and experience. Ivory tower economists and lawyers.