Ha-ha the fed is now asking banks to consider NEGATIVE INTEREST RATES!!!
- Thread starter S2007S
- Start date
Can anyone explain why a Bank would lend Federal funds (excess reserves) to another Bank at 0.38% when they can just park it at the Fed and collect 0.50% on excess reserves ?
Found the answer on the Fed website:
"While IOER (interest on excess reserves) has been effective at influencing the FFER, it has not served as a hard minimum rate at which all institutions are willing to lend funds. This is because some institutions are eligible to lend funds in the federal funds market, but are not eligible to earn IOER, such as the government-sponsored enterprises (GSEs)."
In other words, while no Bank will lend reserves below 0.50%, they can borrow reserves from GSE's at below 0.50% (currently 0.38%) and then earn 0.50% from the FED.
Found the answer on the Fed website:
"While IOER (interest on excess reserves) has been effective at influencing the FFER, it has not served as a hard minimum rate at which all institutions are willing to lend funds. This is because some institutions are eligible to lend funds in the federal funds market, but are not eligible to earn IOER, such as the government-sponsored enterprises (GSEs)."
In other words, while no Bank will lend reserves below 0.50%, they can borrow reserves from GSE's at below 0.50% (currently 0.38%) and then earn 0.50% from the FED.
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You remain the most clueless poster on this site. Yes, you've repeated the same pointless, useless shit millions of times over a 6 year period. You got that right. The economy is doing fine, you just refuse to acknowledge it. Perhaps you don't understand what a stress test is. Perhaps you don't realize that your bias leads you to cherry pick news stories that you think support your idiotic theories. Funny thing is, sometimes you don't even understand the stories you pick out.
The rate hikes are NOT off the table. Remember when you said they wouldn't raise the interest rates last year and I clearly told you there would be a small raise in the fall ? In fact, the Fed themselves telegraphed that rate hike all year, but you refused to believe them. So a bunch of you got all excited when they delayed two months, gleefully exclaiming what "fools" we were to tell you that a rate hike was coming. Two months later it came.
You are the fool here. You shorted Oil all the way down in a bear market. You continually proclaim a 40-60% stock market crash is imminent, and it's not. No chance at all of that happening, companies are too profitable in your so called "useless" world economy.
At times, I just feel sorry for you, you seem uneducated, so I back off and leave you alone. But when you start spamming the board with your posts about "fools" and imminent doomsday events, all bets are off.
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Weren't you the dumbass that was bullish on AAPL at $120 about 6 weeks ago?
It's all fine and dandy to stalk people who are bearish, but where do you own up for all your stupid and nonsensical "calls"?
0.50% raise in rates in two bumps would have very little impact on US indexes, the 0.25% move was followed by a correction based on primarily emotions related to rates and a natural desire for some to lock in huge profits since 2009. Once investors and traders see the world isn't ending with minor rate hikes, anything from 0% to 1.50% isn't all that meaningful long term.
Any large market drop can only be facilitated by a huge drop in corporate earnings. It's not companies that are suffering since 2009.
Or an end to the record corporate buybacks...how conveniently you ignored this little tidbit.
Yes and I have posted here before I think eventually another round of QE will happen.
Three things, in reversal order, are worth noting.
1) Fed has always been and will always be the pawn of financial markets. Did they hike the rate in December of their own accord? Some people naively think so. Had the market not asked for one, they would have never done so.
2) Their response is always too little, too late...until the fire engulfs everything. Then they freak out and go on a spending binge, which ultimately creates another bubble.
3) Fed was the cause of all previous bubbles (see #2).