Jim Myrtle

Jim Myrtle
Send Message
View as an RSS Feed
  • 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
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "''How much'' ... how on earth would I know. This information is secret"

    If it is secret, how do you know they pay any?

    "This is another reason why the FED should be audited"

    They're audited every year. They relesae their balance sheet once a week?

    "The FED calls banks and trades with them at the prices that the banks show"

    Really? There is no auction process? Are you sure?

    "Also, the banks know that the FED will come so they frontrun the FED every time. This is as easy set up for the banks to make money as it can possibly be"

    So it is impossible for a Primary Dealer to make money?
    Are you sure?

    "... this is not a trade for individuals but for banks that can have huge leverage and have deposit funding at 0% or/and can use the FED to fund themselves"

    Banks should borrow from the Fed, overnight, at 0.75% to buy 5 year bonds yielding 0.631%? I think I see a flaw in your strategy.

    "What would be against the law? To buy the bonds directly from the treasury?"

    Yes.

    Here are the latest Fed audited reports.

    http://1.usa.gov/QK5Bqr
    Oct 4, 2012. 06:59 PM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "I don't have commission statements but the FED pays commissions"

    How much?

    "which is absolutely criminal given the fact that they could just go to the treasury and get the bonds there with 0 commission"

    That would be against the law.

    You should buy some of those 5 yr bonds at today's 0.603% yield.
    You're guaranteed a huge profit, I read it on Seeking Alpha.
    Oct 3, 2012. 07:44 PM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "5 yr bonds at 0.614% yield. Wall St. doesn't invest but just borrows to fund the bonds. They borrow at what is called the GC repo rate"

    You want to borrow overnight to fund 5 year bonds?
    How'd that strategy work for Lehmann and Bear?

    "If the average over the life of the bond is say 0.15%, the carry of the bonds is 0.461%"

    That's a mighty big "IF" you've got there.

    "If you have $50 billion of that, you make 50,000,000,000 * .461 /100 of profit on the trade. This is a cool $230.5 million"

    Wow! $230 million and all it takes is $50 billion? LOL!

    "Not bad given that the FED guarantees the risk of the funding leg of the trade"

    Guarantees? For 5 years? Really?

    "They go through the banks and pay very nice commissions"

    You have a rate sheet? Commission statement?
    Oct 3, 2012. 07:13 AM | Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Unfortunately, the money multiplier is potentially infinite"

    And at each step along the way, banks lend no more than their deposits, not multiples of their deposits.
    Oct 3, 2012. 06:13 AM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Any bonds below 5 years will have good carry and very low risk from the position of Goldman or JP Morgan. The FED is making Wall St. rich again. "

    The 5 years had a 0.614% yield today. Is that going to make Wall Street rich?

    "Since the FED doesn't produce anything"

    They made about $80 billion in annual profit for the US Treasury last year and the year before.

    "somebody else must be paying for it and that somebody is Main St."

    Yes, Wall Street paid for that when they sold the higher yielding bonds to the Fed. Main Street didn't pay any of that profit.
    Oct 2, 2012. 08:17 PM | 2 Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    Mike Holt Comments (621) Jim, this example that assumes a 10% r"eserve requirement may help to understand how it is possible for a bank to loan more than the amount deposited"

    Excellent example!
    Total Deposits $651.30
    Total Loans $551.30
    Total Reserves $100.00
    Oct 1, 2012. 06:38 PM | 2 Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Shrinking our way to growth doesn't"

    When did we try that? Be specific.
    Oct 1, 2012. 06:35 PM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Our parents and grandparents went into debt to build the world we inherited"

    Going into debt to defeat Hitler cannot be compared in any way to going into debt so Obama can pay off his donors.
    Oct 1, 2012. 06:34 PM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Jim, you are wrong. Look up money multiplier"

    I know how money multiplier works. I also know how it does not work.
    For instance, it does not allow a single bank to loan more than its deposits. As your RR numbers show, the most a bank can loan is 100% of deposits.
    A $1000 deposit in a new bank allows a maximum loan of $1000.
    Feel free to use your calculator to prove me wrong.

    "This is basic fractional reserve banking. Every textbook gets it right."

    They do get it right. Unfortunately, many who read the textbooks misunderstand what they mean.
    Sep 30, 2012. 07:35 PM | 2 Likes Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "If the reserve requirement was 10% they could lend 10x their deposits"

    Nope. Every bank holds a portion of their deposits in "reserve".

    That means they lend less than 100% of deposits, not 1000% of deposits.

    "But today the reserve requirement is effectively 0% so there is no limit on money creation"

    The limit is, they need a deposit before they can make a loan.

    "Checking account liabilities over $71million are 10%"

    10%? That must mean they have 90% available to loan.
    Sep 30, 2012. 05:27 PM | 1 Like Like |Link to Comment
  • Why The U.S. Is Europe: Central Bank Deficit Funding Thinly Veiled  [View article]
    "Wrong. See "money multiplier"."

    He said the second bank could lend 10 times its deposits.
    You know that's not the case.

    "In reality the reserve requirement is now 0"

    No it isn't.
    Sep 30, 2012. 04:54 PM | 1 Like Like |Link to Comment
COMMENTS STATS
1,278 Comments
883 Likes