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It’s essentially QE4. Fed’s balance sheet is increasing (even if for a short duration). Make no mistake - this results in lower return on cash for savers. At a

It’s essentially QE4. Fed’s balance sheet is increasing (even if for a short duration). Make no mistake - this results in lower return on cash for savers. At a time when big banks call 0.05% “high yield”, this is the last thing we need. If banks are short on reserves they should be increasing interest rates to attract new deposits and maybe selling some of those foreclosed homes they’ve been holding onto for an eternity. The banks have completely failed as a business and the fed is enabling their incompetence. How many stories do we need of money laundering, market manipulation, fraud, until we say enough? The best part of all this? We don't even get to know the real reason there's a liquidity crisis. Obviously the "it's investors buying treasuries and corporations paying taxes!" explanation was BS.

undefined3840 7y ago
Who are you referring to when you refer to “savers”? Interest rates have been basically 0 for a very long time for retail bank customers.
- AznHisoka 7y ago
  Short term CD rates have hovered around 2%. They are not completely liquid but if you are saving for the medium term, they are a valid investment vehicle.
  - RickJWagner 7y ago
    Marcus recently had a 'high interest savings' program where the base rate was 2%, you got a short-term bonus of another percent for signing up. (So effectively 3%). With limits and early withdrawal penalties, though. I think the program's ended, but it was nice when it was available.
  - cylinder 7y ago
    CDs / money market are essentially risk free. I don't understand why people expect a rate of return above inflation without taking any risk. This is a fundamental component of capitalism, and most people have no understanding of it.
- quaquaqua1 7y ago
  Have been getting 1% monthly uncapped for almost 8 years now on my checking account.
  - undefined3840 7y ago
    That is an exception, not the rule. If you have Chase, Citi, BofA, etc. it’s been like .01% for 10 years.
    - basementcat 7y ago
      If you're willing to move your funds to another institution, check out https://www.depositaccounts.com https://www.depositaccounts.com to see how much you could be earning with your money.
    - quaquaqua1 7y ago
      I understand where you are coming from, but my bank has something like 100B USD in assets under management, so I think such a plan is available to millions of people
    - icedchai 7y ago
      Consumer banks barely pay anything. It’s awful. I moved all my long term cash to online banks and investment accounts.
  - icedchai 7y ago
    Where are you getting 1% monthly? I’m getting like 2% yearly from Ally.
  - tanr54ok 7y ago
    That’s over 12% APY. I think you’re either getting scammed or full of it.
    - quaquaqua1 7y ago
      Sorry, I should have been a lot more clear when I wrote this post last night. 1% compounded monthly is what I intended to say, as opposed to compounded continuously or yearly.
- turk73 7y ago
  No, rates were going up in lockstep with fed tightening and peaked late last year. I was finding 6-12 mo. CDs with nearly 3% coupon. Then everything fell apart back in the Spring and it has continued its downward trajectory until the yield curve inverted and now we're looking at all kinds of fucked up rates and short term CDs are like 1.9% but some of those banks are, well, you'd be crazy to do business with some of those names. I watch corporate bonds and the same thing is going on. It's a giant shit show right now. Things are gradually heading in an ominous direction and I did reallocate my investments some just in case. The problem is, you can't rely on bonds anymore, either. So I'm in MM funds at the moment, and those have shitty returns and high fees. The next defensive stage downward for me is precious metals hidden at home. I hate to even imagine doing that, but I won't pay negative rates on savings when gold and silver are available.
deleted 7y ago
[deleted]
daxorid 7y ago
even if for a short duration Nobody will unwind their balance sheets in any substantial or meaningful way, ever. QT ending because asset values came down 10% from all time historical highs should make this abundantly clear. It's a post-2008 world, and the new mandate is to smash that VIX to zero. Every central bank on the planet is engaged in this competitively, and none of them will stop until they manage to destroy their respective currencies. Bear in mind that the 100 year Austrian bond yields close to 1%, so the smart money is betting that it will take over a century for this to ever end.
princeb 7y ago
"When Fed Fixes Repo Markets, Don’t Call It QE: Brian Chappatta" https://www.bloomberg.com/opinion/articles/2019-09-23/when-the-fed-fixes-repo-markets-don-t-call-it-qe https://www.bloomberg.com/opinion/articles/2019-09-23/when-t...
- freejulian85 7y ago
  I'm sure the Fed asked this article be written. They're buying assets from banks and giving them money. What is your definition of QE?
  - elSidCampeador 7y ago
    Did you read the article? They specify the definition of QE (indirectly) there.
    - freejulian85 7y ago
      Per wikipedia (https://en.wikipedia.org/wiki/Quantitative_easing https://en.wikipedia.org/wiki/Quantitative_easing): Quantitative easing (QE), also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy. The fed is buying treasuries and MBS's on a nightly and ongoing basis from the banks to the tune of $100B. Is that not large scale? Are those not assets? Is this not injecting liquidity into the economy? Hell, you can actually see the increasing fed balance sheet from their own data! https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL
    - simplecomplex 7y ago
      “repo operations”, “quantitative easing”, and “emergency asset relief” are all fancy methods of printing money.
      - coliveira 7y ago
        Printing money in itself is not the problem. The problem is where this money goes and what is made of it. Operations such as QE are designed to inject money on the hands on the top of the 1% richest.
rossdavidh 7y ago
While I am no fan of banks, I don't think that (unless we go to negative rates in the U.S., which while not as impossible as it once seemed, still seems off the table here) it makes much difference to savers if they are getting very nearly 0%, or very, very nearly 0%. In both cases, even our modest inflation is an order of magnitude greater, so for all practical purposes they are getting a real interest rate of -1x(the inflation rate). Not that there's not problems with what, I agree, is in many ways QE4. Just that a number very near to 0 getting divided by 2 is not really the biggest one.
- freejulian85 7y ago
  We don't know what interest rates would be if the fed wasn't promising free money to the big banks. My credit union can offer 2.0%, why can't Bank of America or Chase or Wells Fargo? This is no different from the LIBOR manipulation that happened a few years ago. Back then, the media was quick to point out how the LIBOR interest rate impacted everyone from pensioners to savers.
  - delfinom 7y ago
    >We don't know what interest rates would be if the fed wasn't promising free money to the big banks. My credit union can offer 2.0%, why can't Bank of America or Chase or Wells Fargo? Because banks aren't around to make the customers money, they are there to give the shareholders dividends.
    - freejulian85 7y ago
      > Because banks aren't around to make the customers money, they are there to give the shareholders dividends. Fine, but that doesn't entitle them to free money from the Fed.
      - vuln 7y ago
        For the Fed it’s just the “cost of doing business” at zero cost to them.
simplecomplex 7y ago
Main Street is starting to see that the Fed will monetize anything, with no limit. They’re starting to demand access to the printing press. The moral hazard with permanent ongoing QE is becoming a reality if Yang is taken as an omen of what’s to come.
caublestone 7y ago
The value of the US dollar keeps going up while every other currency is going down. Off shore dollar reserves have been increasing as a safe haven.
- coliveira 7y ago
  This is a classic example of bad money expelling good money. The bad currency (dollar) is driving out all other currencies because it is easy to get and use. Its value keeps going up because there is demand, not because it has any value. As long as the dollar is the only/major currency used around the world, its value will continue to hold against other currencies.

undefined3840 7y ago

Who are you referring to when you refer to “savers”? Interest rates have been basically 0 for a very long time for retail bank customers.

AznHisoka 7y ago
Short term CD rates have hovered around 2%. They are not completely liquid but if you are saving for the medium term, they are a valid investment vehicle.
- RickJWagner 7y ago
  Marcus recently had a 'high interest savings' program where the base rate was 2%, you got a short-term bonus of another percent for signing up. (So effectively 3%). With limits and early withdrawal penalties, though. I think the program's ended, but it was nice when it was available.
- cylinder 7y ago
  CDs / money market are essentially risk free. I don't understand why people expect a rate of return above inflation without taking any risk. This is a fundamental component of capitalism, and most people have no understanding of it.
quaquaqua1 7y ago
Have been getting 1% monthly uncapped for almost 8 years now on my checking account.
- undefined3840 7y ago
  That is an exception, not the rule. If you have Chase, Citi, BofA, etc. it’s been like .01% for 10 years.
  - basementcat 7y ago
    If you're willing to move your funds to another institution, check out https://www.depositaccounts.com https://www.depositaccounts.com to see how much you could be earning with your money.
  - quaquaqua1 7y ago
    I understand where you are coming from, but my bank has something like 100B USD in assets under management, so I think such a plan is available to millions of people
  - icedchai 7y ago
    Consumer banks barely pay anything. It’s awful. I moved all my long term cash to online banks and investment accounts.
- icedchai 7y ago
  Where are you getting 1% monthly? I’m getting like 2% yearly from Ally.
- tanr54ok 7y ago
  That’s over 12% APY. I think you’re either getting scammed or full of it.
  - quaquaqua1 7y ago
    Sorry, I should have been a lot more clear when I wrote this post last night. 1% compounded monthly is what I intended to say, as opposed to compounded continuously or yearly.
turk73 7y ago
No, rates were going up in lockstep with fed tightening and peaked late last year. I was finding 6-12 mo. CDs with nearly 3% coupon. Then everything fell apart back in the Spring and it has continued its downward trajectory until the yield curve inverted and now we're looking at all kinds of fucked up rates and short term CDs are like 1.9% but some of those banks are, well, you'd be crazy to do business with some of those names. I watch corporate bonds and the same thing is going on. It's a giant shit show right now. Things are gradually heading in an ominous direction and I did reallocate my investments some just in case. The problem is, you can't rely on bonds anymore, either. So I'm in MM funds at the moment, and those have shitty returns and high fees. The next defensive stage downward for me is precious metals hidden at home. I hate to even imagine doing that, but I won't pay negative rates on savings when gold and silver are available.

deleted 7y ago

[deleted]

daxorid 7y ago

even if for a short duration Nobody will unwind their balance sheets in any substantial or meaningful way, ever. QT ending because asset values came down 10% from all time historical highs should make this abundantly clear. It's a post-2008 world, and the new mandate is to smash that VIX to zero. Every central bank on the planet is engaged in this competitively, and none of them will stop until they manage to destroy their respective currencies. Bear in mind that the 100 year Austrian bond yields close to 1%, so the smart money is betting that it will take over a century for this to ever end.

princeb 7y ago

"When Fed Fixes Repo Markets, Don’t Call It QE: Brian Chappatta" https://www.bloomberg.com/opinion/articles/2019-09-23/when-the-fed-fixes-repo-markets-don-t-call-it-qe https://www.bloomberg.com/opinion/articles/2019-09-23/when-t...

freejulian85 7y ago
I'm sure the Fed asked this article be written. They're buying assets from banks and giving them money. What is your definition of QE?
- elSidCampeador 7y ago
  Did you read the article? They specify the definition of QE (indirectly) there.
  - freejulian85 7y ago
    Per wikipedia (https://en.wikipedia.org/wiki/Quantitative_easing https://en.wikipedia.org/wiki/Quantitative_easing): Quantitative easing (QE), also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy. The fed is buying treasuries and MBS's on a nightly and ongoing basis from the banks to the tune of $100B. Is that not large scale? Are those not assets? Is this not injecting liquidity into the economy? Hell, you can actually see the increasing fed balance sheet from their own data! https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL
  - simplecomplex 7y ago
    “repo operations”, “quantitative easing”, and “emergency asset relief” are all fancy methods of printing money.
    - coliveira 7y ago
      Printing money in itself is not the problem. The problem is where this money goes and what is made of it. Operations such as QE are designed to inject money on the hands on the top of the 1% richest.

rossdavidh 7y ago

While I am no fan of banks, I don't think that (unless we go to negative rates in the U.S., which while not as impossible as it once seemed, still seems off the table here) it makes much difference to savers if they are getting very nearly 0%, or very, very nearly 0%. In both cases, even our modest inflation is an order of magnitude greater, so for all practical purposes they are getting a real interest rate of -1x(the inflation rate). Not that there's not problems with what, I agree, is in many ways QE4. Just that a number very near to 0 getting divided by 2 is not really the biggest one.

freejulian85 7y ago
We don't know what interest rates would be if the fed wasn't promising free money to the big banks. My credit union can offer 2.0%, why can't Bank of America or Chase or Wells Fargo? This is no different from the LIBOR manipulation that happened a few years ago. Back then, the media was quick to point out how the LIBOR interest rate impacted everyone from pensioners to savers.
- delfinom 7y ago
  >We don't know what interest rates would be if the fed wasn't promising free money to the big banks. My credit union can offer 2.0%, why can't Bank of America or Chase or Wells Fargo? Because banks aren't around to make the customers money, they are there to give the shareholders dividends.
  - freejulian85 7y ago
    > Because banks aren't around to make the customers money, they are there to give the shareholders dividends. Fine, but that doesn't entitle them to free money from the Fed.
    - vuln 7y ago
      For the Fed it’s just the “cost of doing business” at zero cost to them.

simplecomplex 7y ago

Main Street is starting to see that the Fed will monetize anything, with no limit. They’re starting to demand access to the printing press. The moral hazard with permanent ongoing QE is becoming a reality if Yang is taken as an omen of what’s to come.

caublestone 7y ago

The value of the US dollar keeps going up while every other currency is going down. Off shore dollar reserves have been increasing as a safe haven.

coliveira 7y ago
This is a classic example of bad money expelling good money. The bad currency (dollar) is driving out all other currencies because it is easy to get and use. Its value keeps going up because there is demand, not because it has any value. As long as the dollar is the only/major currency used around the world, its value will continue to hold against other currencies.