Banks secret door for cheaper cash | Bitcointalksearch.org

redsun114

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Quote from: tabas on December 23, 2023, 01:12:54 PM

And then what? Banks are tied up with the government and their respective Central Bank for each of their own. They are regulated so there's no matter whether they'll offer some interesting high interest rates accounts for most of their customers. But if there's nothing like that, you can see that banks have always these services that can be offered to any customer that comes by to them. While I see many people spreads their hate towards the bank, we can't remove the fact that we still need them as of the moment.

There is no doubt about that. A lot of people say that we don't need to banks now that we have Bitcoin and other cryptocurrencies but that isn't true. You can't use Bitcoin or cryptocurrencies everywhere in the world right now because there might be some merchants that accept cryptocurrencies but that isn't the case everywhere. So, a person that holds Bitcoin and other cryptocurrencies will still have to convert their assets to fiat currencies in order to use it in their daily lives.

When we talk about banks and how they earn money, they don't need new schemes or anything for that when they already have so many ways to earn money. They can easily use the money of their customers to multiply that money and keep what's extra and give back the money to their customers. Not mentioning the fees and stuff they charge.

Parklane777

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Quote from: Juse14 on January 05, 2024, 03:50:08 AM

"Secret door".....if it is revealed here, it will no longer be a secret, but has become public consumption....hihihi

There is one thing that comes to my mind... when I deposit a certain amount of money in a conventional bank, for example 2000 USD, can I withdraw the same amount on the same day? I remembered because I had a sudden need to move.

And there is a story, after I discussed it with my friend... it turned out that I couldn't withdraw the same amount of money on the same day, because the money I saved disappeared instantly, which means the money I had saved in the bank had been lent back to the other party. other. And the bank makes a profit from the money you save, because the bank lends the money back. And if only customers who had saved their money with the bank decided to withdraw their savings simultaneously, would this cause the bank to collapse?

Im happy they have that door because i don't care about the economy outside of markets exchangers and crypto.
Once they have that door even in the economic crisis times we can be sure markets are loaded.

Motu_verse

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Banks were originally invented to manage the economy of the society while the king was at war. But over time, they changed beyond recognition. And with the abolition of the gold standard, the value of money turned to dust. Today, banks give you an IOU (voucher) in return, a piece of paper, taking away your time and freedom.
Loans are a special topic. If you think about it, it is mathematically impossible to pay back a loan. You can't take 100 per cent of your money and pay back 110 per cent. Or rather, banks can. Just print more. But the lender can't. At least, it's not legal Wink

Juse14

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"Secret door".....if it is revealed here, it will no longer be a secret, but has become public consumption....hihihi

There is one thing that comes to my mind... when I deposit a certain amount of money in a conventional bank, for example 2000 USD, can I withdraw the same amount on the same day? I remembered because I had a sudden need to move.

And there is a story, after I discussed it with my friend... it turned out that I couldn't withdraw the same amount of money on the same day, because the money I saved disappeared instantly, which means the money I had saved in the bank had been lent back to the other party. other. And the bank makes a profit from the money you save, because the bank lends the money back. And if only customers who had saved their money with the bank decided to withdraw their savings simultaneously, would this cause the bank to collapse?

BenCodie

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Banks are borrowing record amounts from this new facility.

As they would be, it's basically an arbitrage opportunity that is always liquid at the expected rate on both ends.

This new facility only means one thing - more money creation. It seems that the solution to interest rates and the solution to inflation is once again, print more money. We all know how that goes...they never learn, eh?

The good thing about this is when it is priced into currency markets, the dollar will once again fall and in turn other currencies, like Bitcoin, will appreciate due to the weakened dollar value.

Let them destroy currency...we all know deep down they will do it, which is a part of why a lot of us are here, right?

itorai

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Quote from: STT on December 22, 2023, 06:52:14 PM

Theres alot of schemes like that, banking is one of the most subsidized business sectors operated globally. Its also highly regulated and if you deal dollars they can shut you down anywhere in the world pretty much because of the large centralized influence inherit in this system. The banks are easy choice to support as an industry as they are primary dealers of Government debt, if the banks cant buy then the government cannot spend. More then that if the debt sales dont continue of government bonds then the debt must be repaid a budget surplus is a real hard sell come election. Imagine politics has only its principles to run on not promises of bail outs and debt based overspending, a very hard prospect for anyone to get elected vs the candidate who will do the opposite.
The problem with a circular relationship of banks supported by government programs who in turn will buy the debt to enable the support is the feedback effect is likely to fail at some point leading to extreme alterations in monetary liquidity. Inflation switching to deflation and back again is an impossible scenario in an economy to navigate.

Your views give me new insights into the relationship between the banking sector, subsidies, and economic impact. I think the feedback effect that you highlight has significant potential risks especially in the face of monetary challenges and extreme economic (price) changes that can hurt the economy. But we need to be aware of these risks in order to design sustainable (good) and stable economic policies.

slapper

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So banks are being smart when they deal with the Fed, right? They borrow money fairly cheaply and put it into investments that earn them more. Like they're cheating the system, but properly. Taking advantage of the differences in interest rates, they are using this new Fed tool to make money. That's smart, right? It's a standard case in finance where following the rules really does pay off. They're doing everything they can to take advantage of a cheat code they found in the banking system. The banks' action is a classic example of smart money management

This is exactly why Bitcoin is so attractive. A lot of people have power over Bitcoin instead of just a few central authorities. There should be no more interest loopholes or secret deals. Using Bitcoin, deals between people are completely open and safe. There is power in the people, not in the banks. It's really a financial change that's changing the balance of power and making things more evenly distributed. Bitcoin isn't just a money system; it's a protest against shady financial transactions

Parklane777

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Quote from: so98nn on December 27, 2023, 11:50:50 AM

This helps banks only, whats in there for us as customer? I am pretty sure this will help banks boost their money market easily because if they are getting subsidised rates on their borrowings but they are keeping the same interest rates for the customers (we) then they are making huge difference of margin from this business. I hardly think there is any other kind if business that is so secured. They don't just give away loans, they need collateral, they would only distribute tiny amount of loans to highly reputed clients or credit score bearers. Even though they have perfect margin from fed sources they wont be relieving their clients at any cost. Well, first I thought your title is positive for us but it seems banks are the one who always get benefited no matter what.

It's good even in times of crisis markets are full of money by this backdoor Im happy.

so98nn

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This helps banks only, whats in there for us as customer? I am pretty sure this will help banks boost their money market easily because if they are getting subsidised rates on their borrowings but they are keeping the same interest rates for the customers (we) then they are making huge difference of margin from this business. I hardly think there is any other kind if business that is so secured. They don't just give away loans, they need collateral, they would only distribute tiny amount of loans to highly reputed clients or credit score bearers. Even though they have perfect margin from fed sources they wont be relieving their clients at any cost. Well, first I thought your title is positive for us but it seems banks are the one who always get benefited no matter what.

Promocodeudo

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

Source:
https://www.bloomberg.com/news/articles/2023-12-21/demand-for-fed-s-bank-term-funding-facility-grows-to-record-high?utm_source=website&utm_medium=share&utm_campaign=twitter

OP, banks makes a lot of money by loaning it to both individuals and firms that needs them on a high interest rate, there is know cheap cash in the bank unless you are talking in terms where the borrow to do there own business, as far as I know banks benefit more than their customers, starting from banking activities itself, when you ask for withdrawal slip, you will be charge with a particular amount of money to that effect, even when you need a cheque book the same charge is applied, everything in the bank is money both sms, this is even why I see bank as trash to me, I better convert my btc into ust or buy other reliable coin and live them to mature so that I can make a little profit from them than keeping my hard earned money for bank to pinch it little by little whenever they like, I can't give in for such.

yhiaali3

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All economic systems in the world are based on debt, not just banks. Banks benefit from these facilities granted to them by the government, and in reality they are based on an imaginary basis that is not covered by real assets on the ground.

Quote

Economic commentator Philip Kogan believes that the world's current monetary system became debt-based after the “Nixon Shock,” as US President Nixon ended the link between money and gold in 1971. He also wrote that “modern money is debt and debt is money.” Since the Nixon shock of 1971, money and debt creation have been simultaneously high. This simultaneous creation of money and debt occurs as a feature of fractional reserve banking. After the commercial bank approves the loan, it is able to generate a corresponding amount of cash, which is then acquired by the borrower along with a similar amount of debt.

So, as you can see, the money in the banks is all fake and has no reality.

ChiBitCTy

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I’ve read about this before and this is sadly nothing new when it comes to big banks. Nothing new in the sense of taking advantage of government policies as well and their own bank customers. This is exactly what got me “in to bitcoin” was watching how banks and the banking system operate. This is why I suggest banking with credit unions and small mom and pop type banks.

beerlover

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Quote from: STT on December 25, 2023, 12:41:33 PM

All paper money created is related on a top down value dictatorship anyway. If that central bank fails in some way then the money which is your money will cease to hold value in any case, in a sense after that being true it doesnt matter as much where the money is stored in the various banks related to that central bank. The top bank ensures all other users of the currency follow the rules set or are closed down in favor of a better acting party.
Its not a secret door, most measures taken by central banks and the government in issuance of currency are opening targeting currency inflation by design. They no longer promise to honor a set value but aim to devalue by about 2% every year. The continual funding and liquidity given to all banks is part of this deliberate policy against hard money, its very different to even as recent as the 1980's

Unfortunately this is true, and it's quite unfair as well, and we can't even say that it's unfair because if we do then they label us socialist. I mean let's make it fair is not a socialist thing to say. For example, if I bankrupt tomorrow, if the government saves me from bankruptcy and helps me on my feet and gets me a job and finds me a way to make money and just basically turn my life around, that would be considered bad as a political move, government can't help every citizen right?

In 2008, most famously the banks failed, and yet government saved them all, because that was all they have to, why? I mean if the defense is "if these banks bankrupt, all your money is gone", why not just use the money to help the people, instead of the banks?

YUriy1991

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

There is always a shrimp behind the rock. it is an art and mechanism from the bank how cheap loans can continue to be offered to their customers with other special offers that are certain of their wishes, the amount they lend can be channeled to all their users by providing a lending platform for those who are interested. The basic assumption they will say is that this is our form of concern is to provide services to our users so that alternative financial models that prioritize decentralization and community-based approaches can be enjoyed.

blockman

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Can we imagine how crazy is the situation for most of these banks, central banks and financial institutions? They're there to offer some loans to people while them, they've got also debt from whom? The world bank, feds, etc. wherein people can simply go directly to these governing bodies that are giving loans to these institutions. In that manner, people are getting more interest on top from the borrowed money from the banks and the banks will also put up some interest rate as they've just taken these loans somewhere else like I've mentioned. While I know that there are banks that have got assets but who else doesn't have a debt nowadays? It's a cycle where a pleb like me is being in the cycle of these agencies that makes the most from us.

Mr.right85

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Quote from: Litzki1990 on December 25, 2023, 10:51:15 AM

We keep money in the bank and we think it is safe to keep money in the bank, but when we want to borrow money from the bank, the bank will never give us a loan without interest. We are putting millions in the bank and the bank is doing business with our money. Banks basically make profit in this way. Your money will be given to other people and other people's money will be given to you in this way they balance the accounts. Those who deposit money in the bank but get very less amount of interest compared to borrowing money from the bank, that is, the bank is profiting from both sides. You put money in the bank and the bank gives you a profit of one dollar a year but the amount of money you put in the bank will be seen that the bank is making a profit of $10 by investing that amount of money. In this way the bank basically makes profit.

That’s what business is.
Of course there is always going to be these windows of opportunity certain system avails to itself and to a third party. Banks are unavoidably necessary in our world today, especially with the cryptocurrency idea still trying hard to get a foothold in the financial system run in the world.

Banks provides a gateway for ease of running a business, especially those that deal with large volumes of fiat. You can’t just hold a lot of money in your private safe at home. Your going to feel insecure and possibly pay more for security in other to have the least idea of safety compared to when you would leave it at the bank.

If you’ve hit money with you, why the hell will you need loan and what makes you think, banks will offer a variety of services and not make money out of it. They serve as the custodian of your money and as such, they leverage the opportunity of there holdings and that’s okay, provided you can retrieve your money when needed.

STT

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All paper money created is related on a top down value dictatorship anyway. If that central bank fails in some way then the money which is your money will cease to hold value in any case, in a sense after that being true it doesnt matter as much where the money is stored in the various banks related to that central bank. The top bank ensures all other users of the currency follow the rules set or are closed down in favor of a better acting party.
Its not a secret door, most measures taken by central banks and the government in issuance of currency are openly targeting currency inflation by design. They no longer promise to honor a set value but aim to devalue by about 2% every year. The continual funding and liquidity given to all banks is part of this deliberate policy against hard money, its very different to even as recent as the 1980's

Litzki1990

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We keep money in the bank and we think it is safe to keep money in the bank, but when we want to borrow money from the bank, the bank will never give us a loan without interest. We are putting millions in the bank and the bank is doing business with our money. Banks basically make profit in this way. Your money will be given to other people and other people's money will be given to you in this way they balance the accounts. Those who deposit money in the bank but get very less amount of interest compared to borrowing money from the bank, that is, the bank is profiting from both sides. You put money in the bank and the bank gives you a profit of one dollar a year but the amount of money you put in the bank will be seen that the bank is making a profit of $10 by investing that amount of money. In this way the bank basically makes profit.

Helena Yu

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Quote from: Robert Kiyosaki

Why would I save money, when they keep printing money?

That's the reason why people can't get rich and the banks are survive because they indirectly steal your money when you put your money in banks. Unfortunately not many people aware with this and they can't escape from the matrix because they already get brain washed by the government and banks.

So they choose to let their money drained by inflation and banks instead of taking a risk.

avikz

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

Source:
https://www.bloomberg.com/news/articles/2023-12-21/demand-for-fed-s-bank-term-funding-facility-grows-to-record-high?utm_source=website&utm_medium=share&utm_campaign=twitter

Lol! This is nothing new! Every Bank around the world borrows money from the central bank to meet their statutory liquidity ratio. It is around 6 to 10% of their total deposit received from the public. Also banks can borrow money for many other reasons as well. Now once they have borrowed these money, they can park it in another account with the central bank because they may not need the money to circulate in the market right now. So they earn interest on it. It is called money market and many banks participate in such money market instruments. Even multiple mutual funds are created to land money to the banks.

It seems FED is just doing it on a large scale. Nothing really new in it.

jaberwock

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Quote from: wxa7115 on December 24, 2023, 01:38:08 AM

Quote from: KiaKia on December 23, 2023, 12:41:29 PM

All of my life I have been robbed by the banks, and it's funny to think about, so many of my people trust their banks just as they trust the government, I don't know about others but bank is the greatest scam known to human, so I am not surprised by any scheme they are playing, I just pity people that believe so much that their money should always be in their bank account.

I will never take loan from the bank nor will I ever borrow money from the bank, it's like filling up their pockets, working hard to get them richer, banks are smart, I have heard a lot from a old banker in my country, he exposed a lot to me about bank internal operations, I am always surprised seeing some banks folding up, because it's way easier to make money running a bank, so much illegal money making schemes behind the close door but looks so legal.

In many cases it is not that people trust banks, it is simply they do not know of any alternative, so the small number of people that have some savings prefer to keep it at the bank thinking it will be safer there.

However banks have done a really good job at involving themselves in almost any aspect of the economy, so even if governments were willing to reduce their power they have no way to do it, since most legislators are on their payroll anyway and any proposal which could undermine their privileges will never become a law.

So those people already know that banks are not trusted? But, it's crazy to think that they still put their money on it. Why can't they just hold their money instead? They can buy vaults, install a CCTV, and add others that would increase the safety of their money. If only these people will do their research, they will be aware that there are actually a lot of bank alternatives, especially nowadays.

Of course we have Bitcoin now, and it is thrice or so on... better than the banks. I guess we already know why, so I don't need to explain it again. Banks shouldn't worry though, because like you said, they still have their own importance. Something related to the economy.

sokani

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Quote from: jrrsparkles on December 23, 2023, 02:29:22 AM

Banks do not need to make money when they can create money and watchHow Banks Create Money.

This isn't about printing money but how they can turn a 10K deposit from someone into 250K in the next few years by lending the same money to 10 other people and charging double/triple the interest rate that they pay you.

Banks are really milking their customers. Put your money in a fixed deposit account and get a peanut as interest. Borrow a loan from a bank and payback with hefty interest. Now, who is fooling who? They'll convince you to deposit your money with them while they use it for business, and sometimes when you've need for it, they'll deny you. They also make money from their high charges in the name of cash deposits, withdrawals, card maintenance, sms notification alerts, email notification alerts, bank statements etc.

Parklane777

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Quote from: adaseb on December 24, 2023, 01:07:22 AM

I still think this program is ridiculous. When I first heard about it in March I assumed it was some joke. Basically they are giving back their UST at pare value while the market value is much much lower due to the duration risk. I guess it makes sense but I think it would of been better to have a different approach to this.

The main reason this happened is because banks didn’t hedge properly. Yields were at records low and they didn’t think with all the massive inflation going on that they would eventually raise rates and the bonds would drop in value. No rocket science really. Banks should of had economists to predict this.

It's Nice specially b4 christmas it's like gift for markets not bad actually.

boty

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Quote from: wxa7115 on December 24, 2023, 01:38:08 AM

In many cases it is not that people trust banks, it is simply they do not know of any alternative, so the small number of people that have some savings prefer to keep it at the bank thinking it will be safer there.

However banks have done a really good job at involving themselves in almost any aspect of the economy, so even if governments were willing to reduce their power they have no way to do it, since most legislators are on their payroll anyway and any proposal which could undermine their privileges will never become a law.

It is true that for some people who choose to keep their money in the bank, of course they have no other choice to keep their assets safer than saving them in the bank, but for some people there are also those who choose to buy real assets and only save a little of their money in the bank. bank and this really depends on each individual's choice. Of course the bank can guarantee the security of the money we save in the bank, so people who don't have other choices will of course keep their money in the bank.

Fortify

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

It's actually the job of the banks to make the best returns for their shareholders and unfortunately that often means taking advantage of any schemes offered by the government, then maximizing them to the fullest extent possible. It's usually the fault of the government, run by politicians or government officials, who fail to understand the business consequences or potential for abuse that well intended offers may induce. These officials are often minnows swimming with sharks, that build laws designed out of good faith but do not have adequate boundaries or restrictions. Sometimes the abuse will start off slow as companies take time to figure it out and then ramp up to extraordinary and unintended amounts, before collapsing due to the scale.

Zigabel

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

Banks have got other investments and ventures in which they keep their funds in other for them to continually stay in business. Banks also get involved in trading in the financial market and stocks investments aswell not.

wxa7115

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Quote from: KiaKia on December 23, 2023, 12:41:29 PM

All of my life I have been robbed by the banks, and it's funny to think about, so many of my people trust their banks just as they trust the government, I don't know about others but bank is the greatest scam known to human, so I am not surprised by any scheme they are playing, I just pity people that believe so much that their money should always be in their bank account.

I will never take loan from the bank nor will I ever borrow money from the bank, it's like filling up their pockets, working hard to get them richer, banks are smart, I have heard a lot from a old banker in my country, he exposed a lot to me about bank internal operations, I am always surprised seeing some banks folding up, because it's way easier to make money running a bank, so much illegal money making schemes behind the close door but looks so legal.

In many cases it is not that people trust banks, it is simply they do not know of any alternative, so the small number of people that have some savings prefer to keep it at the bank thinking it will be safer there.

However banks have done a really good job at involving themselves in almost any aspect of the economy, so even if governments were willing to reduce their power they have no way to do it, since most legislators are on their payroll anyway and any proposal which could undermine their privileges will never become a law.

adaseb

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I still think this program is ridiculous. When I first heard about it in March I assumed it was some joke. Basically they are giving back their UST at pare value while the market value is much much lower due to the duration risk. I guess it makes sense but I think it would of been better to have a different approach to this.

The main reason this happened is because banks didn’t hedge properly. Yields were at records low and they didn’t think with all the massive inflation going on that they would eventually raise rates and the bonds would drop in value. No rocket science really. Banks should of had economists to predict this.

gunhell16

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Quote from: retreat on December 23, 2023, 01:41:00 AM

If you think the economics of banks are that simple, you are very wrong, the economics of banks are so complex that even imagining it is sickening. But as far as I understand, the banks park their money mostly in securities and loans to their customers, then some in investments, businesses, etc. And because of this, during an economic crisis, many banks will limit their customers from making loans and withdrawing money, because most of their money is somewhere else and when everyone withdraws money from them it means it will disrupt their operations and could cause them to collapse.

What you say is true because it depends on how much money the customers entrust to their bank. Because often the money that banks lend doesn't actually come from their pockets but instead comes from the money that their customers put in, and then they will grow interest on it.

And the interest that they will give to their customers will also come from the interest owed by their other customers, as if it is easy money that the bank earns from money that is not theirs, and then they only give a small amount of interest here per annum. So if there is no one to put money into them to trust them, the banks will close down easily; that's just the cycle of banks' existence.

Twentyonepaylots

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Quote from: retreat on December 23, 2023, 01:41:00 AM

If you think the economics of banks are that simple, you are very wrong, the economics of banks are so complex that even imagining it is sickening.

Complex if you explore every part of it, but for us, one who uses banks it is pretty clear. Banks are designed to make money, not to store. So if you are one of their customers, you are part of their large scheme. Sickening, big YES, Imagine depositing in a bank, you take a loan and they put interest on that loan, basically you are paying interest from your money.

Quote from: retreat on December 23, 2023, 01:41:00 AM

But as far as I understand, the banks park their money mostly in securities and loans to their customers, then some in investments, businesses, etc. And because of this, during an economic crisis, many banks will limit their customers from making loans and withdrawing money, because most of their money is somewhere else and when everyone withdraws money from them it means it will disrupt their operations and could cause them to collapse.

Banks are businesses around the world, tbanks do invest the money from their depositors and make that money grow while making money with their customers from charges of keeping their money. If you read the terms and agreement when a crisis happen, you'll understand that you don't matter to them as long as they are continue earning. Bankruptcy affects their customer not them, it is not their money in the first place, customers are the bank, and behind those are just puppeters.

Gozie51

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Banks are close associates of the government and they carry out the financial plans and policies of government. Presently, we can not sperate the banks from government because of those financial policies including interest rate increase when government wants to mop up excess liquidity in circulation. When government also want to devalue, they don't just do that by mere wish but they make policy through the centre bank and it flows down to banks and the people. No matter how we try to look into the cheats running through the banks against the people regards to overcharge in services rendered, the government uses the centre bank as a major implementing pot to her projects and for now the government can't rely of crypto for that and not any time soon especially because they can not manipulate crypto like fiat through the banks in regulating inflow and outflow of transactions as to how they want to run the economy.

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And then what? Banks are tied up with the government and their respective Central Bank for each of their own. They are regulated so there's no matter whether they'll offer some interesting high interest rates accounts for most of their customers. But if there's nothing like that, you can see that banks have always these services that can be offered to any customer that comes by to them. While I see many people spreads their hate towards the bank, we can't remove the fact that we still need them as of the moment.

KiaKia

sr. member

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All of my life I have been robbed by the banks, and it's funny to think about, so many of my people trust their banks just as they trust the government, I don't know about others but bank is the greatest scam known to human, so I am not surprised by any scheme they are playing, I just pity people that believe so much that their money should always be in their bank account.

I will never take loan from the bank nor will I ever borrow money from the bank, it's like filling up their pockets, working hard to get them richer, banks are smart, I have heard a lot from a old banker in my country, he exposed a lot to me about bank internal operations, I am always surprised seeing some banks folding up, because it's way easier to make money running a bank, so much illegal money making schemes behind the close door but looks so legal.

jrrsparkles

sr. member

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Banks do not need to make money when they can create money and watchHow Banks Create Money.

This isn't about printing money but how they can turn a 10K deposit from someone into 250K in the next few years by lending the same money to 10 other people and charging double/triple the interest rate that they pay you.

Dump3er

hero member

Activity: 1526

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Quote from: NewRanger on December 23, 2023, 02:01:01 AM

Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

So, if they do that, try looking internally first to see whether the strategy is relevant to the vision and mission of central banks in general, which have big tasks such as maintaining financial stability in society.

I'm just keeping it simple and this is nothing but a strategy, you could say, in the end, to generate bank profits at some point. Btw, Apart from having potential benefits as you explained above, this step also creates potential losses which are no less interesting in the normal functioning of financial markets.

While this is supposed to be true, in reality all central bankers can never effectively be protected from lobbyism or external influence driven by personal agendas. People who solely and truly act in the best interest of society as a whole are pretty rare I suppose! Wink

And as it has been mentioned here before, I think some of the schemes banks are using to leverage their own positions or to exploit any loopholes may not even be known to the public or come to light ever, or when it is too late.

mindrust

legendary

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Banks do these types of stuff all the time. It is literally their job to lend money high while borrowing cheap. They do it with us too. They borrow our money for x%, then lend it to somebody else for x+1%. The situation you are talking about is the same thing. Only the customers are different. When there is an opportunity to make money, they will make it unless it's illegal to do so and sometimes even that won’t stop them.

Regular people can trade assets. (Common merchants)

People who own a cash exchange can trade currencies. (Requires a license)

Banks can trade assets, currency and interest. (Requires an expensive license)

NewRanger

sr. member

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Quote from: Parklane777 on December 22, 2023, 05:36:40 PM

Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

So, if they do that, try looking internally first to see whether the strategy is relevant to the vision and mission of central banks in general, which have big tasks such as maintaining financial stability in society.

I'm just keeping it simple and this is nothing but a strategy, you could say, in the end, to generate bank profits at some point. Btw, Apart from having potential benefits as you explained above, this step also creates potential losses which are no less interesting in the normal functioning of financial markets.

retreat

sr. member

Activity: 1106

Merit: 391

If you think the economics of banks are that simple, you are very wrong, the economics of banks are so complex that even imagining it is sickening. But as far as I understand, the banks park their money mostly in securities and loans to their customers, then some in investments, businesses, etc. And because of this, during an economic crisis, many banks will limit their customers from making loans and withdrawing money, because most of their money is somewhere else and when everyone withdraws money from them it means it will disrupt their operations and could cause them to collapse.

STT

legendary

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Theres alot of schemes like that, banking is one of the most subsidized business sectors operated globally. Its also highly regulated and if you deal dollars they can shut you down anywhere in the world pretty much because of the large centralized influence inherit in this system. The banks are easy choice to support as an industry as they are primary dealers of Government debt, if the banks cant buy then the government cannot spend. More then that if the debt sales dont continue of government bonds then the debt must be repaid a budget surplus is a real hard sell come election. Imagine politics has only its principles to run on not promises of bail outs and debt based overspending, a very hard prospect for anyone to get elected vs the candidate who will do the opposite.
The problem with a circular relationship of banks supported by government programs who in turn will buy the debt to enable the support is the feedback effect is likely to fail at some point leading to extreme alterations in monetary liquidity. Inflation switching to deflation and back again is an impossible scenario in an economy to navigate.

Parklane777

jr. member

Activity: 154

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Something like this i tought so it's good for markets and traders and for financial world.
Banks are pocketing real money by borrowing money from the Fed's newest backstop facility, which charges a lower rate, and then parking it at another unit of the Fed, which pays higher interest.
Banks are borrowing record amounts from this new facility.

Source:
https://www.bloomberg.com/news/articles/2023-12-21/demand-for-fed-s-bank-term-funding-facility-grows-to-record-high?utm_source=website&utm_medium=share&utm_campaign=twitter

Topic: Banks secret door for cheaper cash (Read 446 times)