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author of article is kind of an idiot. you too can buy us bonds (the 4% he refers to) you just are locked in for 30 years. banks give you less yield because you
by martingaler 17y ago
author of article is kind of an idiot. you too can buy us bonds (the 4% he refers to) you just are locked in for 30 years. banks give you less yield because you can get your money out quickly.
what he should say is that the us govt programs to support the market are really used to prop up bank earnings through the yield curve instead of a direct recapitalization. an individuals choice not to save does nothing to "screw the man."
- cynicalkane 17y agoWhat's worse is that point--that banks profit off spreads--doesn't actually do harm to consumers. It's the long-term lending, short-term borrowing structure of banks that enables them to offer higher interest rates than the market short-term interest rates. That's how banks came about: people got higher interest by pooling their money with money-lenders than they did lending money themselves. Both the consumers and the bankers capture some surplus. Welcome to free trade. You don't have to take my word for it. Compare the rates on short to medium-term CDs with the rates offered by Treasuries. Both of these have the same risk to the consumer, but which offer higher interest? (Some CDs have excessive withdrawal penalties. Go to a bank that doesn't have this, or use brokered CDs.)
- martingaler 17y agobanks traditionally borrow short to lend long. that is how profit and loss capability is generated. that is the s&l proverbial plan. its built into the design and is not a flaw. the problem is expecting the taxpayers to bail the players out when things do not go according to plan and the banks turn out to stink at their jobs.