Wednesday, December 30, 2009

Extreme Fed Interest Rates Continue to Crush Non-Cartel Banks

Has any government official thought to ask Mr. Bernanke why he has been charging banks between 500% and 10,000% (with momentary spikes to infinity) more for 30 day cash than the longer term 3-Month Treasury rate, since August of 2007?

Are the safest banks in our system really that risky? Or is the Fed trying to make them that risky?


  1. What is the future of the dollar if all major nations dump all of their dollar supply? I know you have probably addressed this 10 times but can't find it. I don't think that there is a future for the dollar as a reserve currency, not sure that matters anyway, but I would guess that in the next 3 years the dollar is destroyed in that aspect.

  2. 3) Savings and debt always balance. Every $1 of savings somewhere is $1 of debt. Money does not magically pay interest (interest is only paid by a borrower). Why again is there some massive problem in the current system?

  3. Marc Faber calling for a large rally in the US$ and US equities in 2010. He says that there is so much money sitting in cash and foreign markets that it will see that the US is doing less bad than everyone else and money will flee foreign markets and come into US stocks along with a breakout higher in the US$. He sees perhaps a 10% decline in equities followed by a move to fresh highs in the DOW as it has under performed over the last decade and will outperform over the next several years. So a stronger US $ and higher US equity prices. He says this will all occur while deficits continue to grow and the FED continues to monetize debt. He says over 5 years the equity markets will be up over 100% from here and the bond market will be in the tank.

  4. What think you of this? BS or a worry?

    Can't link here but it's on ZeroHedge. Article titled "sprott calls fed ponzi scheme half trillion treasury purchases are unaccounted for" if you wanna google it....

  5. FDR

    How would you rate Marc Faber? What is his quarterback rating?

    Does Faber = Buffet

  6. Trimtabs is claiming that the FED is buying $100 billion a month in S&P futures, do these positions ever need to be unwound? How much longer can the FED buy futures or outright equities for? Seems silly to go short if the government is ensuring you with positive gains month over month. If the FED already knows where the S&P will be in 6 months, what is the point of playing when they control all markets. since you don't believe that the FED can inject capital into the economy this way and it is not inflationary, then what is your take?

  7. Here's what I don't get:

    It's a free market, right?

    So if the Fed is charging banks more than the free market does for currency, then clearly the banks would prefer to get their currency from the free market and not from the Fed, right?

    So what prevents them from doing precisely that?

  8. Anonymous said...
    3) Savings and debt always balance. Every $1 of savings somewhere is $1 of debt. Money does not magically pay interest (interest is only paid by a borrower).

    Please Please Read Modern Money Mechanics by the FED.. Debt is created newly "Money" by general ledger.. Most people believe loans are made from savings... If only that was the case!


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