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All of the money is there. There's no money printing. The issue is the money has been invested in longer-term securities and no bank is prepared for 25% of de

All of the money is there. There's no money printing. The issue is the money has been invested in longer-term securities and no bank is prepared for 25% of deposits to be wired out in a single day...generally they hold around 1-2% in cash.

anon291 4y ago
The money is not there. Just because a bond is valued at $100 dollars does not mean that 100 exists in cash somewhere. Bonds and debt create money but they don't create cash. Bank withdrawals are cash (essentially). Svb failed not because they didn't have money but because they have no cash. Now the federal reserve, the main issuer of cash, announces that tomorrow, you can take out 209 billion in cash. That is literally money printing. Edit, to illustrate: suppose I deposited $100 into svb. They bought a bond. That means the government can now spend my $100. Now the government has an asset worth $100 AND SVB has an asset worth more than $100 in a few years. Thus the total assets of the government and myself is MORE than the $100 I put in. Except one of those assets (the bond) cannot be exchanged for cash at face value. To say the money is there is true. The dollars are there. But the cash is not. My 100 in cash is now with some government agency somewhere. If the fed turns around now and says they will give me 100 cash for the deposit that is stuck in a ten year bond, then both the government AND myself will have 200 cash total from my original deposit of 100 (and there is also some bond out there with some monetary value). Thus cash was created which means money was printed. Which is inflationary which is going to further pressure the fed.
abigail95 4y ago
Trading a 1% bond above market value is money printing - where does the money come from? It's obviously inflationary compared to not doing it. If all the money was there the bank would just give the bonds themselves to depositors.
frankreyes 4y ago
There's the time component too. A 10 year bond is supposed to be cashed out in 10 years, not tomorrow. If you cash out before those 10 years, that cash is indeed money printing.

anon291 4y ago

The money is not there. Just because a bond is valued at $100 dollars does not mean that 100 exists in cash somewhere. Bonds and debt create money but they don't create cash. Bank withdrawals are cash (essentially). Svb failed not because they didn't have money but because they have no cash. Now the federal reserve, the main issuer of cash, announces that tomorrow, you can take out 209 billion in cash. That is literally money printing. Edit, to illustrate: suppose I deposited $100 into svb. They bought a bond. That means the government can now spend my $100. Now the government has an asset worth $100 AND SVB has an asset worth more than $100 in a few years. Thus the total assets of the government and myself is MORE than the $100 I put in. Except one of those assets (the bond) cannot be exchanged for cash at face value. To say the money is there is true. The dollars are there. But the cash is not. My 100 in cash is now with some government agency somewhere. If the fed turns around now and says they will give me 100 cash for the deposit that is stuck in a ten year bond, then both the government AND myself will have 200 cash total from my original deposit of 100 (and there is also some bond out there with some monetary value). Thus cash was created which means money was printed. Which is inflationary which is going to further pressure the fed.

abigail95 4y ago

Trading a 1% bond above market value is money printing - where does the money come from? It's obviously inflationary compared to not doing it. If all the money was there the bank would just give the bonds themselves to depositors.

frankreyes 4y ago

There's the time component too. A 10 year bond is supposed to be cashed out in 10 years, not tomorrow. If you cash out before those 10 years, that cash is indeed money printing.