kylesch

Returning to the Real World

congrats on your marriage.

Money Supply: The Myth of Hyperinflation

For the record, my previous post (shown below) was post-edited by someone at Seeking Alpha without my approval or consent.

They removed the first paragraph where I urged the author to update the article to include the correct fact that the Fed was NOT using existing Federal Funds on excess reserve to purchase assets.


On Sep 03 07:22 PM kylesch wrote:

>
>
> The Fed did not entice banks to deposit their existing cash on reserve
> at the Fed. The Fed really did print the 1 trillion+ dollars and
> then used a combination of instruments to place this out in the marketplace
> (TAF, TALF, buying commercial paper, buying treasuries, buying agency
> debt and CMBS ...).
>
> Once the Fed has given the newly printed cash to the banks in exchange
> for their assets as collateral, the banks have then taken this cash
> from the Fed and have left it on deposit as excess reserves.
>
> Remember, the Fed has been trying to *increase liquidity*. If the
> banks were simply leaving existing cash on reserve at the Fed, this
> would have decreased liquidity (removed cash from the system).<br/>
>
>
> For those interested, John Mason, a former economist at the Fed,
> has a post that touches on this very subject: maseportfolio.blogspot...
>

Money Supply: The Myth of Hyperinflation

The Fed did not entice banks to deposit their existing cash on reserve at the Fed. The Fed really did print the 1 trillion+ dollars and then used a combination of instruments to place this out in the marketplace (TAF, TALF, buying commercial paper, buying treasuries, buying agency debt and CMBS ...).

Once the Fed has given the newly printed cash to the banks in exchange for their assets as collateral, the banks have then taken this cash from the Fed and have left it on deposit as excess reserves.

Remember, the Fed has been trying to *increase liquidity*. If the banks were simply leaving existing cash on reserve at the Fed, this would have decreased liquidity (removed cash from the system).


For those interested, John Mason, a former economist at the Fed, has a post that touches on this very subject: maseportfolio.blogspot...

What Aren't Banks Telling Us?

Banks are currently earning 0.025% on their excess reserves (a 4th lever the Fed now has). Since the excess reserves are about 100% of required reserves, there effectively is no overnight inter-bank lending market.

I don't get why banks don't put this money in short-term T-Bills that yield ~0.1%?

Honestly, what are the economic motives for banks to have so much in excess reserves?

Intuit Screws Up, And H&R Block Will Profit

I'm not sure why you would say "not that many people care about e-filing" as I believe the IRS has reported that over 60% of filings were electronic. That number is only going to go up...

lot's of assertions, not numbers.

The Most Important Price in an Economy

one of the best reads in a while. I've just added you to my small list of favorites...looking forward to more good material.

SanDisk: Risk Down $3, Reward Up $30

Well, things didn't turn out all that great did they.

Cornerstone’s Unauthorized Liquidation

They clearly state that they return capital[1], investors know what they're doing. I bet you can make a pretty penny by loaning shares of CRF to someone who wants to short it. Perhaps that's what Renaissance Technologies is doing with their large position.

[1] www.businesswire.com/p...

Internet No Longer Immune to Economic Slowdown

Did you listen to the Google conference call at all? They had an economist explain some of the macroeconomic trends they see in their data. Basically they said that advertisers are *not* cutting spending, in fa ct in some industries, like automotive, advertisers are bidding up higher to attract a smaller set of consumers. Indeed consumers are being more cautious with their online spending habits, but Google also said that they expect consumers to do more research online before they buy (making their dollar go further). This in turn should lead to more clicks in the future, like the Wal-Mart effect.

Google's Android OS Hits Snags with Mobile Carriers

The Wall St. Journal is article is bogus FUD. There's no delay:

googlewatch.eweek.com/...

As for strategy, I think Google just wants to have a platform out there in the mobile market. By offering free software they instantly have something they can use to monetize audio, video, text. I think its a smart move since the mobile industry is a huge market.

ETFs, Commodities and Dubai

I was in Dubai in January 2008 and the Gould Souk was alive and bumping...I'm sure it was in a bit of a lull due to the heat.

It's easy to get caught up in the glitz and glamor there...that's what they're going for. At the Executive Council I remember hearing that they'll run out of most oil in 2017 (Abu Dhabi has much more...) and they're trying to remake their city into a multifaceted hub...brilliant planning and vision if you ask me. You really get to see how quickly a country can grow when it has a leader with a vision and is not bogged down in the slow wheels of democracy (not that democracy is bad...it's just not necessarily optimal for growth when you have a strong, capable leader).

I think they'll succeed in becoming a transportation hub between Europe and Southeast Asia as well as the de facto financial exchange in the middle east (simply because they have a head start on derivatives). The tourism goals they have are pretty lofty and I doubt they'll meet their internal goals, but who knows.

I got a chance to go out and stand on the UK island of "The World" as it was being built. Simply amazing.

It's cool that you got to see Dubai in its infancy. I would encourage anyone who has the chance to visit now. It's not everyday that you get to see the next major metropolis in its infancy.