5 ms·

The title is clickbaity. It's not like the banks are missing any of their depositors' money.

by sanp 4y ago

NotYourLawyer 4y ago
I mean. Some of them are!
- MacroChip 4y ago
  Possibly all of them!
permo-w 4y ago
so what you’re saying is that there’s a major bank out there that could pay out all - or even half of - its deposits right now?
- esotericimpl 4y ago
  [dead]
- comicjk 4y ago
  This is not what "missing" means, or else every parent at work with kids at school would have a missing child (after all, they don't have the kids right now). The banks have loaned out the money, but they do keep track of whom they loaned it to.
  - permo-w 4y ago
    this is a poor analogy. first of all, the parents (depositors) may not have their kids (money) right now, but the school (bank) definitely does. real banks definitely don’t it would be like if at the end of the day the parents came to pick up their kids and—on a good day—10% of them were available to be picked up a more appropriate analogy would be if the school was handing out the kids to random people that very possibly wouldn’t give them back, or if they would, possibly not for at least a few years once they’ve grown up a bit the whole concept of a modern bank is ridiculous and a lot of people need to seriously reset their thinking around it. if you want a high risk investment than you can put your money in a fund. high street banks should not be high risk investments, especially for the measly interest rates they give out
    - comicjk 4y ago
      In my analogy, parents = banks and school = bank loan recipients (the federal government, if the bank has bought government bonds). The money isn't missing when it's loaned out by the bank; the bank knows when it will get it back, and can estimate the cost of getting it back early. The concept of a "modern" bank (federally-insured fractional reserve banking) is 90 years old now. Its faults are well understood and, for all the drama, it isn't high-risk for ordinary depositors.
mLuby 4y ago
It's not quite "yelling fire in a crowded theater" but it's pretty close. More like "you'll be dead soon" (for certain values of soon).
chippiewill 4y ago
Well strictly speaking virtually no bank has all of their depositors' money, otherwise they'd struggle to turn a profit. What you're saying is that the valuation of their assets at maturation (or at market for non-maturing assets) exceed their current liabilities which should be true across the board. No large bank could pay out 50% of their deposits in a single day without becoming insolvent. And even if they could fully liquidate they couldn't all cover their liabilities at current market value.
michael1999 4y ago
Where exactly to you think they hold deposits?
_heimdall 4y ago
This is one case where I don't mind the clickbait. People need to know how the heck banks got into this mess and this is the first time I've seen an article tie together the reverse-repo market, covid-era money printing, and banks currently sitting underwater on government-backed securities. It's also worth noting that if you read "banks" in the title to generally mean the banking system, that money is effectively missing as it now sits on the Fed's books and is no longer in the banking system at all. That's a start difference to standard repo markets where the total liquidity of the banking system doesn't change when securities are purchased.

The title is clickbaity. It's not like the banks are missing any of their depositors' money.

by sanp 4y ago

The title is clickbaity. It's not like the banks are missing any of their depositors' money.

NotYourLawyer 4y ago

I mean. Some of them are!

MacroChip 4y ago
Possibly all of them!

permo-w 4y ago

so what you’re saying is that there’s a major bank out there that could pay out all - or even half of - its deposits right now?

esotericimpl 4y ago
[dead]
comicjk 4y ago
This is not what "missing" means, or else every parent at work with kids at school would have a missing child (after all, they don't have the kids right now). The banks have loaned out the money, but they do keep track of whom they loaned it to.
- permo-w 4y ago
  this is a poor analogy. first of all, the parents (depositors) may not have their kids (money) right now, but the school (bank) definitely does. real banks definitely don’t it would be like if at the end of the day the parents came to pick up their kids and—on a good day—10% of them were available to be picked up a more appropriate analogy would be if the school was handing out the kids to random people that very possibly wouldn’t give them back, or if they would, possibly not for at least a few years once they’ve grown up a bit the whole concept of a modern bank is ridiculous and a lot of people need to seriously reset their thinking around it. if you want a high risk investment than you can put your money in a fund. high street banks should not be high risk investments, especially for the measly interest rates they give out
  - comicjk 4y ago
    In my analogy, parents = banks and school = bank loan recipients (the federal government, if the bank has bought government bonds). The money isn't missing when it's loaned out by the bank; the bank knows when it will get it back, and can estimate the cost of getting it back early. The concept of a "modern" bank (federally-insured fractional reserve banking) is 90 years old now. Its faults are well understood and, for all the drama, it isn't high-risk for ordinary depositors.

mLuby 4y ago

It's not quite "yelling fire in a crowded theater" but it's pretty close. More like "you'll be dead soon" (for certain values of soon).

chippiewill 4y ago

Well strictly speaking virtually no bank has all of their depositors' money, otherwise they'd struggle to turn a profit. What you're saying is that the valuation of their assets at maturation (or at market for non-maturing assets) exceed their current liabilities which should be true across the board. No large bank could pay out 50% of their deposits in a single day without becoming insolvent. And even if they could fully liquidate they couldn't all cover their liabilities at current market value.

michael1999 4y ago

Where exactly to you think they hold deposits?

_heimdall 4y ago

This is one case where I don't mind the clickbait. People need to know how the heck banks got into this mess and this is the first time I've seen an article tie together the reverse-repo market, covid-era money printing, and banks currently sitting underwater on government-backed securities. It's also worth noting that if you read "banks" in the title to generally mean the banking system, that money is effectively missing as it now sits on the Fed's books and is no longer in the banking system at all. That's a start difference to standard repo markets where the total liquidity of the banking system doesn't change when securities are purchased.