4 ms·

$100m future dollars, which are less valuable than present dollars.

• daveguy 4y ago
  That's hedging against inflation (which is definitely something they should have been doing for long term bonds). Interest rates directly affect the sale price of a bond, and it could have been hedged against, but it wasn't required. They won't do it unless it's required. Banks over 50 billion need to be regulated again (and they should lower it to 10 billion too).
• s1artibartfast 4y ago
  $100m future dollars are still still $100m dollars. It is the value of the dollar that is changing, not the number of them that you hold. The day you are paid, you will still get handed exactly $100m million. Every day between now and then you will still have exactly $100m in bond holdings. How many cheeseburgers you can buy with that number of dollars may change from day to day, but the number of dollars will not.
  • morelisp 4y ago
    You don't need to appeal to cheeseburgers to not want to value 100 future dollars at 100 current dollars, if you can buy 100 future dollars for 80 current dollars, which is essentially what happened when rates rose. (Someone else is offering 100 future for 80 current because they have a forecast about cheeseburgers, sure. But you don't have to agree with that forecast to take their deal; the deal looks even better for you if you don't agree.)
    • s1artibartfast 4y ago
      The whole point of HTM as an asset class is that you dont plan to sell it. Think of how you would report a non-transferable asset with maturation on your balance sheet? How would you report savings in a CD with a steep early exit penalty? Herein lies the difference between a list of assets, and a list of asset liquidation value.