Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
I'm not sure you understand what's going on. If you understand the concepts of prop trading and market making then you know that banks with market making operations hold inventories of stocks. This is not some conspiracy theory that needs "corroborative testimony." Banks who make markets hold stocks. Period. Now show me the difference in a "market making" inventory and a "prop trading" portfolio.
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
With all due respect, anyone who thinks that banks' prop trading desks don't trade stocks hasn't ever talked to a former prop trader. Similarly, show me a person who can differentiate between 'legitimate' market making in stocks and 'illegitimate' prop trading in equities, and I'll show you a liar. ha
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Right. And there isn't any connection between prop trading and market making. And banks would never (ever) use their excess deposits and excess reserves to bid up stocks. These things just don't go on because the system is honest and banks are very, very happy with the negative real returns they get on their excess reserves. There is just a hint of sarcasm here.
Is The Fed Set To Become Insolvent? [View article]
This is a good question. It is generally assumed that the IOER rate will be equal to the Fed funds rate. Here is what the Fed has to say about that particular point:
"This is a simplifying assumption. In the future, depending on the operating framework and other factors, the IOER rate could be above, equal, or below the federal funds rate."
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Oh.. Sh$&^$t that's right!! Ha.. an egregious error to be sure RHD! Its funny because I thought that before I posted it and then I googled the quote itself and a big picture of Clint came up... I got lazy and didn't click on it to verify. My dad would be ashamed! ahahaha
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
I will say one last thing to attempt to address Charlie's very impassioned comments: the point here is not "QE forces banks to use the repo market more than they would otherwise." The point is: QE floods the system with liquidity and in general, that liquidity can be laundered through the repo market leaving behind both cash to use and collateral still parked on the pledging institution's books." The idea here is how the repo market facilitates the use and misuse of excess liquidity and part of that excess liquidity comes from QE. That is about as succinct an explanation as I can give in terms of Charlie's ardent insistence upon drawing a link between QE and repo. It's not "QE and repo" per se, it's "excess liquidity and repo." QE just provides some of that liquidity.
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Charlie, I didn't mean that the Fed must be in every repo equation...I mean...seriously? You are determined not to get this and that is just fine with me and with everyone else reading your comments as well I would think. You are demonstrating a profound unwillingness to abstract from the nuts and bolts of repo transactions and QE. The problem is that I understand what you are saying, but I don't think you understand what I'm saying. So like Josey Wales, we have a "failure to communicate." There are some great articles out there on this subject other than mine which you can easily track down. I imagine however, that you do understand how all of this fits together and you are just arguing to argue. I'm sure there are others here who will oblige you on that front, but I cannot any longer. Thanks again for reading and taking the time to comment.
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Reality Bites: Economy Begins To Shrink As Fed Goes Broke [View article]
Is The Fed Set To Become Insolvent? [View article]
"This is a simplifying assumption. In the future, depending on the operating framework and other factors, the IOER rate could be above, equal, or below the federal funds rate."
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
http://bit.ly/V5mfBI
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]
Repoed, Part 3: Proof Deposits Are At Risk And A Disappearing Act Explained [View article]