Topic: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion - page 20786. (Read 26608330 times)

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billyjoeallen: Read this or shut up:
http://www.newyorkfed.org/research/current_issues/ci15-8.pdf

inb4 they are lying.



oh boy what an old hat.

You made a statement that was demonstrably false - that banks effectively have no reserves now - which is literally the polar opposite of the truth, as they actually have more excess reserves than ever in history.  You can theorize that their real liabilities are still greater than even this record level of reserves until you go blue in the face if you want to, but it won't change the fact that you clearly just didn't realize that banks actually have record reserve levels now.  Own your wrongness and move forward.

And AGAIN - I really don't care about the argument as to whether the the banks are solvent or not...  I just wanted to point out the anomalous level of excess reserves, and you gave me the opportunity to do that.  Thanks

You really are frustrating.  Every dollar in existence was LENT into existence either by the Fed expanding it's balance sheet to buy bonds or by fractional reserve lending. You know this.  Of course there is more debt than money, because ALL that money has to be paid back at interest.

M2 is almost all liabilities of the  bank, just as M1 is.  I can't even think of an exception to this except M0
which as you know is a tiny fraction of M1.  And who gives a rip what your intentions were? You were responding to MY post and after arguing against a point I never made, you want to change the subject. 

ALL banks have more liabilities than they can meet if they all come due at the same time. That's been known for ages, since I was a kid watching It's a Wonderful Life. What is new is that the loans are massively undercollateralized by markets being propped up artificially. This ranges from mortgages being propped up by the FED buying MBSs to government bonds bought by the Fed from primary dealers days after auction. 

Now you could say "who cares if the loans are undercollaterized as long as the payments are being made?" but that's what I'm getting at. The loans AREN'T being repaid in a growing number of cases ranging from sovereigns (Greece, PR) to payday loans.  You can't see this immediately because of the churn. It's perfectly normal and healthy to refinance at a lower rate, but some are borrowing at HIGHER rates just to make payments on earlier loans at LOWER rates. This is clearly unsustainable.  Honest accounting would show all of those loans as worthless.  The PRIMARY reason for ZIRP is to hide this state of affairs and it's why it can't ever end. 

Coin
Explanation

M1, M2, etc., in no way represent 'liabilities of banks'.  They are measures of how much money (in US dollars) exists.  M1 is all the money that exists in the form of cash and demand accounts, i.e., all the dollars in the world that are immediately spendable.  The other Ms add other money that exists but is not immediately liquid. like bank reserves, savings accounts, CDs, etc.

Your initial claim was basically that banks have 'underperforming loans' that exceed the actual amount of money that even exists.  While I guess this is theoretically possible, it seems to me to be highly unlikely.

In any case, the intent of my initial post was not to defend the solvency of the banks, but rather to bring attention to the unnaturally huge amount of excess reserves held by banks now - especially considering that the level of excess reserves has (naturally) been vanishingly close to zero throughout the history of banking - and maybe get someone to wonder why this has changed, and maybe even wonder what the implications of this change might be.

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Explanation

$300 in Nov.-Dec. ?

The FED is leveraged like 80-1 so it can´t really do jack. If they start hiking their capital base will simply evaporate in due course (bond price and yield move in opposite directions) if they continue QE their leverage will become even more extreme. Nothing to do but somehow keep kicking the same old can down the road.

Uncle Sam´s fiscal year ends Sept. 30 so I guess that debt ceiling will be at least a fleeting issue soon.

Banks have more liabilities than just M1 (checking deposits etc). What about M2? CDs? 


Yes, money market funds. Ask the people with money market funds at Lehman Bros what happens when they break the buck. 

Also, why do you think they suspended mark-to-market accounting?  I think you know damn well almost every investment bank has a prop trading desk where they gamble in the markets.  And it's the bonds that may prove most problematic. Puerto Rico may end up being worse that Greece.

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I guess it comes down to what % of the swaps market is made up of customers in the US.

Coinflip is incorporated in the US; Bitfinex in Hong Kong.  I'm not sure we need to worry too much just yet, unless the HK government (or Beijing, applying pressure on HK SAR) adopt the same line as the CFTC.

So uh...

Bitfinex having to unwind everything would be kinda ugly right?

http://www.cftc.gov/PressRoom/PressReleases/pr7231-15

Dude, for someone I once mistook as intelligent, you sure post a lot of crap nowadays.  Are you just staying drunk 24/7 nowadays?

You really believe the banks have $2.5T plus required reserves in 'underperforming loans'?  That number is at least as big as the total current M1.

That graph is actually a lot more interesting than you seem to realize, in multiple ways.

Congratulations on taking a snip of a sentence without quoting the whole thing, Genius. I said the banks have effectively zero reserves "If you account for underperforming loans" 
This includes bonds from Greece, Puerto Rico, junk bonds, mortgages on homes with negative equity, etc.

What an asshole.

The dollar is probably not going to collapse for quite a while. China's stock market may crash, the global wealth gets shuffled, and the price of Bitcoin goes up. Best times to sell as far as I'm concerned.

Often claimed the very same about DOW. There's absolutely no difference if the top is 5K 15K or 50K as several people have predicted in the past. It's nothing but a number. What is truly at stake is WHERE the excess money is at? And most importantly, what the one(s) who has the pile is gonna do with it?

Doom? Nah. Just ordinary manipulation of the whole planet.