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Excess reserves are near a record high: https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS Banks are
by joobus 10y ago
Excess reserves are near a record high: https://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS
Banks are just sitting on their cash. Also, the Fed is paying the banks not to loan out this money, currently 0.5%.
- toomuchtodo 10y agoThe solution is negative interest rates for banks and corporations, positive interest rates for individuals. Forces business investment (or dividends), but promotes savings for individuals.
- orian 10y agowhat if us-corps keep most money offshore?
- toomuchtodo 10y agoAren't most first world central banks going negative interest rates already? I guess they could always try to park cash in Venezuela.
- skylan_q 10y agoIt's actually higher prime interest rates. Sure, people can borrow at 3% interest (or whatever is provided) but why would banks want to necessarily want to loan out at such a low interest rate?
- toomuchtodo 10y agoI don't understand the question. Are you asking why would banks use negative rates?
- skylan_q 10y agoPretty much. What's in it for the banks to loan out at incredibly low rates? Remember that there isn't only an aversion to high interest rates for people trying to secure loans. The banks want higher interest rates to make loaning worthwhile.
- prostoalex 10y agoModern corporations (at least those with cash balances that matter) have a choice of monetary systems, and will overweight those competing for their money and underweight those penalizing them. On a multinational scale penalizing Apple and Ford cash reserves, but not extending the same penalties to Samsung, Xiaomi or Toyota, gives the foreign players greater flexibility.