Jim Myrtle

Jim Myrtle
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  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Due to your inability to grasp this concept, and/or your refusal to concede that $100 of money created by the Federal Reserve can be leveraged into bank assets of a far higher amount, you will never be a banker"

    Any deposit can lead to additional loans, not just deposits of newly created high-powered money.

    I'm still waiting for proof that a bank can lend more than, let alone ten times, their deposits.
    Try again?
    Oct 6, 2012. 04:29 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "However, by allowing banks to engage in other activities, this right to borrow directly from the Federal Reserve at artificially low interest rates and to then leverage the amounts borrowed for purposes other than making loans results in perverse outcomes entirely different than those that were intended"

    This is awful! How much are the banks borrowing from the Fed at these artificially low rates?

    "(with the full expectation that they would be bailed out if those other risky activities were to turn against them --"

    Bailed out? You mean loaned money for a short period of time?
    Oct 6, 2012. 04:21 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Its anyone that gets their hands on the new notes first"

    Primary dealers sell bonds to the Fed. They're banks.
    They don't benefit when they get an asset with a lower coupon.

    "The alternative to this is selling those bonds for cash to someone other than the Fed for a loss right now"

    What loss? They'd sell them at the market price, to the Fed or someone else.

    "It saves the bank from getting smeared, really fast in the here and now."

    LOL! That's funny.

    "Are you familiar with Tier 1 capital, and its implication for the banks?"

    Maybe you'll explain it to me?

    "Clearly. It relies on IRR analysis"

    Your unique definition of subsidy depends on IRR? Wow!

    " The subsidy is all about making it easy for the bank to stay funded"

    You're really stretching here.

    "Now enter the Fed. Suddenly the demand treasuries has a new player. The treas doesn't have to compete for rate like it used to"

    The Fed has fewer Treasuries than 1 year ago. I'm pretty sure there have been over $1 trillion in new issues over the last 12 months.

    "All that has happened is that wealth that used to be in the hands of the general populace is now concentrated in the hands of those that got the subsidy, namely the banks"

    The banks have less money and that means they "got wealth from the hands of the populace"?
    It's like English isn't even your first language.
    Try this:

    Subsidy:: a grant or gift of money: as

    a: a sum of money formerly granted by the British Parliament to the crown and raised by special taxation

    b: money granted by one state to another

    c: a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public

    http://bit.ly/TeAa9U
    Oct 6, 2012. 04:17 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "@JimMyrtle, where did the $190 in deposits come from?"

    One customer deposited $100.
    Another deposited $90.

    "The current reserve ratio is 0%"

    Bank of America reserves 0% of their deposits?
    I don't believe that. Care to share your proof?
    Oct 6, 2012. 11:27 AM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Who said it was?"

    The people who claim that the "first receivers of new money benefit, everyone else loses"

    "What is also not limited is the people that pay for this subsidy"

    I still don't see the subsidy involved when the Fed buys a bond with a yield in the 1% - 2% range, in exchange for cash yielding 0.25%.

    Maybe you have a different dictionary? Perhaps you could copy and paste the definition you're using?

    "So, whether you like it or not, you pay for it"

    The banks earn less and the Fed gives their earnings to the US Treasury.
    Sounds like banks lose and taxpayers have a slightly smaller deficit to fund.
    Oct 6, 2012. 11:25 AM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "This is what is critical here. I call it "liquidity sloshing". Once you recognize how the liquidity can slosh from risk-on asset classes to risk-off asset classes, you learn how to take positions to take advantage of this"

    Once again, this "subsidy" isn't limited to those firms that sell bonds to the Fed.
    Oct 6, 2012. 10:59 AM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "The Fed wasn't created to hurt banks. It was created to be their subsidy."

    How is taking higher yielding bonds from them and giving them cash yielding 0.25% a subsidy?

    "But the Fed is giving them even less of a concern to compete for deposits with QEi"

    Yes, banks obviously need more cash yielding 0.25%.
    Why do you feel that?

    "Again, it is saving them from even lower earnings and outright collapse"

    Lowering their earnings now is saving them from lower earnings in the future? Right.....
    Lowering their earnings now is saving them from collapse?
    Your logic is a bit twisted.
    Oct 6, 2012. 10:37 AM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "What would hurt them is if the bonds they were holding at 1.75% saw the yield for a similar bond rise to 5%"

    Yes, holders of fixed rate bonds are hurt when rates rise.

    "In such an environment, such as an inflationary environment, with yields rising, then deposit costs would be rising. Holding the bonds would generate a loss and selling the bonds would generate a loss"

    So you're saying anyone can get the special "Fed subsidy" just by selling their bonds before rates rise?
    Doesn't sound so sinister when you phrase it like that.

    "By placing cash on the balance sheet of the banks, the Fed basically eases the need for banks to compete for deposits"

    Banks currently have $1.4 trillion in excess reserves.
    I think it's safe to say they don't need new deposits.

    "Its still a subsidy, its just not necessarily a subsidy designed to produce a big gain"

    Sounds like your "subsidy" is lowering bank's earnings.
    Oct 6, 2012. 10:05 AM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "The first recipients of the new money get the full value with no dilution"

    I love this claim. The Fed buys $5 billion of 10 year Treasuries, yield 1.75%, from Goldman and gives them excess reserves yielding 0.25%.
    How does Goldman benefit from that?

    The Fed buys $5 billion of 4% FNMA MBS from JP Morgan, YTM 1.11%, and gives them excess reserves yielding 0.25%.
    How does JP Morgan benefit from that?
    Oct 6, 2012. 09:08 AM | Likes Like |Link to Comment
  • The Scourge Of Central Banking  [View article]
    "Are you saying that increasing the value of the dollar during the Great Depression turned out to be a bad idea after all?"

    You think deflation is a good thing? Why?
    Oct 5, 2012. 11:39 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Who do you think audits them?"

    A very large accounting firm. If you looked at my link, you'd know that.

    http://1.usa.gov/Obcwce

    "There is a reason why Ron Paul is demanding an audit"

    Because he's a politician.
    Oct 5, 2012. 06:32 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "The FED is never audited"

    The audits at my link show you are mistaken.

    "Nobody knows what the FED does"

    You are not everyone.

    "Both ways the argument is a waste of time"

    No kidding. You post feelings, I disprove them with facts.
    Then you post more feelings. Good luck with that.
    Oct 5, 2012. 06:29 PM | Likes Like |Link to Comment
  • The Scourge Of Central Banking  [View article]
    "we are now facing a low-inflationary "lost decade" with banks content to borrow at .0025% and buy Treasuries at 1.98%."

    Where can banks borrow at .0025%? From who shall they borrow at this rate?
    Oct 4, 2012. 09:33 PM | 2 Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "The initial deposit was $100.
    The bank makes a loan to it's customer of $90"

    Yes!

    "The customer initially deposits its $90 loan proceeds in an account at the bank. The bank may then make an $81 loan against that $90 deposit"

    You are correct sir!

    "The initial $100 deposit has just been converted into loans of $171"

    As you've just shown, $190 in deposits allowed $171 in loans.

    The loan number is never larger than the deposit number
    Oct 4, 2012. 07:08 PM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Jim, the initial deposit was $100"

    Yes.

    "That's the amount of money created by the Fed"

    You bet.

    "That $100 was leveraged into loans of $651.30"

    Yes.
    And at no point in the process did a bank lend more than their deposits. At each point, they lend less.
    That's why total loans is always less than total deposits. Like I said.
    Unlike what you claimed.
    Oct 4, 2012. 07:02 PM | Likes Like |Link to Comment
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