It's coming isn't it?

[afwjam]

It's only logical these things will happen with increasing frequency as we continue accelerating down the wrong course.
Where do you think the biggest shake out will occur? Which markets will be hit hardest? Where's the biggest bubble?

 

[William Tell]

I thought it was all going to crash years ago. Nothing surprises me anymore they might manage to kick the can another 30 years. Yeah its gonna get bad but who knows when.


Banking etc is the biggest bubble. Fiat money is BS. If you can't physically hold it or explain why it has value its BS.

 

[afwjam]

I have no doubt they will keep it going after even another round or three hard recessions, the market still responds to their lies and manipulation. I should have clarified I'm not talking about the "end", I'm talking about the next correction.

 

[TheTexan]

I have every confidence that Yellen can wind down the trillions in excess reserves, without consequence.

Eezee peezee

 

[Zippyjuan]

I have every confidence that Yellen can wind down the trillions in excess reserves, without consequence.

Eezee peezee

The Fed does not have to sell off a single Treasury to unwind QE. And they don't have to do it all over a short period of time. They can gradually let them mature and not replace all of them (currently they are buying new securities to replace the maturing ones maintaining their net balance). But I would not expect them to try to unwind 100% of what they bought.

 

[TheTexan]

The Fed does not have to sell off a single Treasury to unwind QE. And they don't have to do it all over a short period of time. They can gradually let them mature and not replace all of them (currently they are buying new securities to replace the maturing ones maintaining their net balance). But I would not expect them to try to unwind 100% of what they bought.

Yes and I'm sure the banks will patiently wait during that process while their trillions in reserves are earning .25%

Because Yellen will wind down the balance sheet AND keep interest rates at 0. Yes - she is really that good. She went to Yale.

 

[Zippyjuan]

Yes and I'm sure the banks will patiently wait during that process while their trillions in reserves are earning .25%

Because Yellen will wind down the balance sheet AND keep interest rates at 0. Yes - she is really that good. She went to Yale.

"Excess reserves" are funds over and above their required reserves- they are free to loan those out if the wish. And in fact, they have been decreasing. They hit a peak level of $2.7 trillion in August of 2014 and were below $2 trillion as of January of this year (they have gone back up slightly since then- currently $2.4 trillion which still leaves half a $trillion less). https://fred.stlouisfed.org/series/EXCSRESNS

 

[TheTexan]

"Excess reserves" are funds over and above their required reserves- they are free to loan those out if the wish. And in fact, they have been decreasing. They hit a peak level of $2.7 trillion in August of 2014 and were below $2 trillion as of January of this year (they have gone back up slightly since then- currently $2.4 trillion which still leaves half a $trillion less). https://fred.stlouisfed.org/series/EXCSRESNS

Yes and I'm sure that will have no impact on inflation whatsoever. So far so good, right?

 

[oyarde]

Yes and I'm sure the banks will patiently wait during that process while their trillions in reserves are earning .25%

Because Yellen will wind down the balance sheet AND keep interest rates at 0. Yes - she is really that good. She went to Yale.

I never went ta Yale so I just put on Motorhead , Whorehouse Blues .

 

[Zippyjuan]

Yes and I'm sure that will have no impact on inflation whatsoever. So far so good, right?

Depends on how quickly those funds are taken out. Slowly over a long period of time? Should have no impact on inflation. Withdrawn quickly over say a few weeks? That would be much more inflationary. It will depend on the demands of borrowers. If the economy is growing quickly there may be a bigger demand for loans to expand businesses and that could draw things down a bit faster. If the economy is stagnant, business and individuals won't be needing to borrow large amounts of money and it will stay at the banks.

 

[TheTexan]

Depends on how quickly those funds are taken out. Slowly over a long period of time? Should have no impact on inflation. Withdrawn quickly over say a few weeks? That would be much more inflationary.

Nice, we can print trillions of dollars and slowly add that to the monetary base and it has no impact on inflation? We should have started doing this decades ago, we'd all be rich!

 

[Zippyjuan]

Nice, we can print trillions of dollars and slowly add that to the monetary base and it has no impact on inflation? We should have started doing this decades ago, we'd all be rich!

The monetary base is money not doing anything. Money has to be spent to have an impact on prices or the economy. Money under a mattress has the same impact. Prices rise when there are more dollars chasing after the same amount of goods and services. Money not chasing goods and services isn't having any effect. Again it will depend on how much gets spent how quickly when it does enter the economy. Right now it is just potential. That is why we haven't seen any high inflation due to the huge surge in the Monetary Base during the economic crisis.

 

[TheTexan]

The monetary base is money not doing anything. Money has to be spent to have an impact on prices or the economy. Money under a mattress has the same impact. Prices rise when there are more dollars chasing after the same amount of goods and services. Money not chasing goods and services isn't having any effect. Again it will depend on how much gets spent how quickly when it does enter the economy.

Right, those trillions are under a mattress currently. But you're saying, as long we take out those trillions slowly, then... no impact on inflation.

Whats your definition of slowly? Years... Or millenia's, cus thats a lot of money under that mattress

 

[Zippyjuan]

Right, those trillions are under a mattress currently. But you're saying, as long we take out those trillions slowly, then... no impact on inflation.

Whats your definition of slowly? Years... Or millenia's, cus thats a lot of money under that mattress

$800 trillion already removed between August 2014 and January 2017- almost a quarter of it. Has that significantly impacted inflation?

 

[TheTexan]

Half a $trillion already removed since 2014. Has that significantly impacted inflation?

A little bit ya. Within healthy limits.

So at least right now, everything is awesome

Free money, no consequence, its the golden age of modern banking

 

[TheTexan]

$800 trillion already removed between August 2014 and January 2017- almost a quarter of it. Has that significantly impacted inflation?

I think your original post was more accurate, there is 500 billion taken out, not 800

 

[Zippyjuan]

I think your original post was more accurate, there is 500 billion taken out, not 800

Peak was $2.7 trillion in August, 2014. Low was $1.925 trillion in January- that is about $800 billion. Current level is $2.2 trillion or $500 billion released. If we go with $500 billion, that is an average of about $200 billion a year added to the $14 trillion economy. Not a significant increase in the money supply.

 

[TheTexan]

Peak was $2.7 trillion in August, 2014. Low was $1.925 trillion in January- that is about $800 billion. Current level is $2.2 trillion or $500 billion released.

I wonder why it went back up.

 

[TheTexan]

I wonder why it went back up.

IOER at 1% these days. Apparently Yellen not ready for that money to leave the mattress

 

[Zippyjuan]

I wonder why it went back up.

Could be more deposits taken in or fewer loans issued. March/ April includes tax refund time for many people.

The Fed offering higher rates means they want banks to hold onto more reserves.

As indicated in the minutes of the March 2015 FOMC meeting, the Federal Reserve intends to set the IOER rate equal to the top of the target range for the federal funds rate.

https://www.federalreserve.gov/monetarypolicy/reqresbalances.htm

The Fed Funds rate is the rate banks can borrow money overnight to meet reserve requirements. They can also borrow from other banks at that rate.