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2021 - Is inflation finally back in the conversation?

Reagan1k

By Reagan1k
in Business and Markets

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Bateshorn
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The only thing more predictable than the GOP running up huge deficits on tax cuts and military spending, is each one suddenly becoming horrified by deficit spending 5 mins after a Democrat is sworn in

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B00M

B00M 6735

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Posted
23 minutes ago, Mullet Free said:

A trillion here, a trillion there. Then you’re starting to talk about real money. 
 

 

 

So I guess the goal is to fight inflation purely by driving down the value of real estate and forcing bankruptcies in every sector except finance. 
John Oliver Reaction GIF by MOODMAN

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Hefeweizen

Hefeweizen 5447

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Same as it ever was.  Kleptocracy moose out front should have told ya.

 Every one of these crises has ended up with the industry more regulated for a while.  Then they buy legislators, wait for the outrage to die down, and deregulate while their minions in Washington let them run wild.  
 

Fucking banks.  

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gsoda3

gsoda3 3362

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6 hours ago, washparkhorn said:

Just a reminder on brrrrt . . . In order to bailout the financial system and reckless wealthy depositors, the Fed has injected 2 trillion in available liquidity. 
58AD90C8-799A-4907-8C8F-79BC02B094AB.thumb.jpeg.164ba69bef51a4e8979eaf49830c0b51.jpeg

 

whomever drew that up is showing his ignorance.  same with everyone who chuckled at or liked it.  VCs are investing in technology.  they fund ideas that make our lives better.  they're not investing when they deposit their money at a bank.  it's the same as you putting your money in a safe in your house.  if a rat chewed out the bottom of your safe and is about to chew your money next you're going to move it to another safe.  no one would you accuse you of betraying your commitment to investing in your safe.  that's ridiculous.

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B00M

B00M 6735

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44 minutes ago, gsoda3 said:

 

whomever drew that up is showing his ignorance.  same with everyone who chuckled at or liked it.  VCs are investing in technology.  they fund ideas that make our lives better.  they're not investing when they deposit their money at a bank.  it's the same as you putting your money in a safe in your house.  if a rat chewed out the bottom of your safe and is about to chew your money next you're going to move it to another safe.  no one would you accuse you of betraying your commitment to investing in your safe.  that's ridiculous.

Yeah I didn’t really get that cartoon either. I think the concern is what this means for FDIC insured amounts moving forward. Is the limit still $250k or not? If your smaller regional bank fails, will you be made whole? 
 

the dunking on silicone valley bros is dumb but par for the course

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washparkhorn

washparkhorn 9974

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The vc bros and their depositors (you know—the ones who say “learn to code” when they break things and people lose their jobs) weren’t bright enough to protect their deposits with insured cash sweeps—a fintech invention that has be around since the mid-2000’s. 

So we socialized their losses with two trillion in liquidity. The least they could do is say thank you.

06450A43-9A26-4A95-9746-2C686E991B66.thumb.jpeg.65d836644cc4c779b260e9a50ff12819.jpeg

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Mullet Free

Mullet Free 39

Posted
Posted
3 hours ago, jimmyjazz said:

Didn't the last bank loan program actually repay fully plus?

Which one? TARP? For that one total “investments” were $426.7B. We’re going almost 5x this time. $2T. For reference the original Cares Act for the entire economy during the height of Covid fear was $2.2T.  
 

1 hour ago, B00M said:

Yeah I didn’t really get that cartoon either. I think the concern is what this means for FDIC insured amounts moving forward. Is the limit still $250k or not? If your smaller regional bank fails, will you be made whole? 
 

the dunking on silicone valley bros is dumb but par for the course

Meh. It would be hard to find an industry or group of people that benefited more from a decade plus of ZIRP and easy money than Silicon Valley/VCs/Big Tech. As soon as it’s reversed, their specialty Bank blows up and sparks another big bailout package. 

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Neonmoon

Neonmoon 38130

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3 hours ago, gsoda3 said:

 

whomever drew that up is showing his ignorance.  same with everyone who chuckled at or liked it.  VCs are investing in technology.  they fund ideas that make our lives better.  they're not investing when they deposit their money at a bank.  it's the same as you putting your money in a safe in your house.  if a rat chewed out the bottom of your safe and is about to chew your money next you're going to move it to another safe.  no one would you accuse you of betraying your commitment to investing in your safe.  that's ridiculous.

Lighten up Francis. 

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B00M

B00M 6735

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Posted (edited)
18 hours ago, B00M said:

Yeah I didn’t really get that cartoon either. I think the concern is what this means for FDIC insured amounts moving forward. Is the limit still $250k or not? If your smaller regional bank fails, will you be made whole? 
 

And there you have it. Yellen announces that only banks that pose systemic risk will have all deposits insured. Accidentally or intentionally this will fuel regional bank runs as the wealthiest depositors move money to where they get free insurance. 

that seems like such a worse decision than describing this as temporary universal back stopping. what am I missing?
 

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Captainant

Captainant 28592

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2 minutes ago, B00M said:

And there you have it. Yellen announces that only banks that pose systemic risk will have all deposits insured. Accidentally or intentionally this will fuel regional bank runs as the wealthiest depositors move money to where they get free insurance. 

that seems like such a worse decision than describing this as temporary universal back stopping. what am I missing?
 

What's crazy though is that the cap was raised to $250B on the justification that banks under that size DID NOT pose an insitutuional risk. There's just no rhyme or reason now, it's calvinball to protect the investor class - all paid for by wage earners via inflation from the liquidity dumps

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Mullet Free

Mullet Free 39

Posted
Posted
1 hour ago, B00M said:

And there you have it. Yellen announces that only banks that pose systemic risk will have all deposits insured. Accidentally or intentionally this will fuel regional bank runs as the wealthiest depositors move money to where they get free insurance. 

that seems like such a worse decision than describing this as temporary universal back stopping. what am I missing?
 

 

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washparkhorn

washparkhorn 9974

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Matt Stoller (pro-enforcement of antitrust laws) may be right:

Quote

I will just note that the FDIC was not panicking, and if it had been able to go through with its original plan, uninsured depositors would have gotten back 50% of their cash almost immediately, and the rest back shortly thereafter, with only a slight possibility of a haircut. If the Fed had opened up its discount window or a facility to discount good collateral, there might have been runs on mid-size banks, but those would have been contained. And if the Fed had actually broken up the Too Big to Fail banks - JP Morgan, Citigroup, Bank of America, Wells Fargo, and Morgan Stanley - there wouldn’t have been a run at all. The only reason people withdrew uninsured deposits is because they had de facto government banks. 

But instead, Powell and Yellen, who run Biden’s financial policy, forced a bailout of all uninsured depositors, billionaires like Conway, and firms like Roku, which had $500 million sitting in a bank account. That’s utterly absurd. As one European bank regulator said in horror, “At the end of the day, this is a bailout paid for by the ordinary people and it’s a bailout of the rich venture capitalists which is really wrong.” And what it means is that a new class of banks, with $100 billion of assets, are now de facto government banks. The 5000 small community banks aren’t, so they will eventually get wiped out (as they are starting to notice. Little is as annoying as the solidarity that community bankers feel towards the Wall Street bankers trying to kill them.) More fundamentally, it shows that Dodd-Frank, with its homework for regulators, its stress tests, its living wills, its goal of ‘ending Too Big to Fail,’ is a conclusive failure.

https://mattstoller.substack.com/p/fire-the-fed
 

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Snake Diggity

Snake Diggity 4716

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7 minutes ago, washparkhorn said:

Matt Stoller (pro-enforcement of antitrust laws) may be right:

https://mattstoller.substack.com/p/fire-the-fed
 

I do think he’s right in that banks over a certain size are de facto government banks, but I don’t think that’s a new development; that goes back to 2008.

I also am failing to understand how the move to make uninsured SVB deposits immediately whole equates to injecting 2T of stimulus into the economy.  My interpretation of what was done is that essentially the FDIC did what SVB could not, and that is to accelerate the liquidation of SVBs assets to meet the demands of the bank run.  The assets were there and have value, they just weren’t liquid enough to meet the timing required to survive the bank run.  There may have been some gap in paper value as of last week and what they end being sold for, but I don’t think it will be less than the total withdrawn deposits and I certainly don’t think it’s $2T.

To me the lesson from this boils down to the fact that FDIC should offer/require insurance above the $250k threshold and/or banks should require large depositors to utilize sweeps to get their daily balances under the threshold so that they are insured.  Yes, that should have been done prior to this debacle, but the consequences of forcing the uninsured depositors to wait for SVBs assets to be liquidated in order to get access to their money would not have been worth whatever additional future prevention/risk aversion it would have created.

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Mullet Free

Mullet Free 39

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30 minutes ago, Snake Diggity said:

I do think he’s right in that banks over a certain size are de facto government banks, but I don’t think that’s a new development; that goes back to 2008.

I also am failing to understand how the move to make uninsured SVB deposits immediately whole equates to injecting 2T of stimulus into the economy.  My interpretation of what was done is that essentially the FDIC did what SVB could not, and that is to accelerate the liquidation of SVBs assets to meet the demands of the bank run.  The assets were there and have value, they just weren’t liquid enough to meet the timing required to survive the bank run.  There may have been some gap in paper value as of last week and what they end being sold for, but I don’t think it will be less than the total withdrawn deposits and I certainly don’t think it’s $2T.

To me the lesson from this boils down to the fact that FDIC should offer/require insurance above the $250k threshold and/or banks should require large depositors to utilize sweeps to get their daily balances under the threshold so that they are insured.  Yes, that should have been done prior to this debacle, but the consequences of forcing the uninsured depositors to wait for SVBs assets to be liquidated in order to get access to their money would not have been worth whatever additional future prevention/risk aversion it would have created.

The $2T number comes from JP Morgan. Story was shared upthread. 

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Snake Diggity

Snake Diggity 4716

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5 minutes ago, Mullet Free said:

The $2T number comes from JP Morgan. Story was shared upthread. 

But that number was not an estimate for how much new money would be created.  It was a maximum for how much backstop the Fed would/could provide.  It’s 2 wildly different things.  The Fed’s move to bridge liquidity for banks that get run on is not inflationary (at least in anything except the extreme short term) as far as I can tell.

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Captainant

Captainant 28592

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51 minutes ago, washparkhorn said:

Matt Stoller (pro-enforcement of antitrust laws) may be right:

https://mattstoller.substack.com/p/fire-the-fed
 

It's interesting that they're arguing that THIS event proves that Dodd-Frank was bad legislation, when it's been neutered and limited several times since its passage. 

IDK why this is such a big shock to everyone, it's been clear for my entire adult life that if you're not an investor you can get fucking bent. In our capitalist system, wage earners are a necessary burden but the REAL pillars of society are the capital holders who graciously invest and create jobs for the wage earners. All of the benefit from our growth in productivity since the 70's has gone to investor class over wage earning class while all of the costs have been passed down to wage earners as consumers.

The Fed and our government doesn't need to protect wage earner money, only investor money. Otherwise there may not be jobs anymore!

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Incredulity

Incredulity 11880

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2 minutes ago, Snake Diggity said:

But that number was not an estimate for how much new money would be created.  It was a maximum for how much backstop the Fed would/could provide.  It’s 2 wildly different things.  The Fed’s move to bridge liquidity for banks that get run on is not inflationary (at least in anything except the extreme short term) as far as I can tell.

kinda smart ass response.

 

It's inflationary in that is stops a catastrophic depression and the associated deflations therein

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Posted
Posted
1 hour ago, tbone_ said:

This smells like huge fuck for the regionals and community banks

I guess I have to give her credit for not spewing bullshit and trying to gloss over it?

But yeah, if you have >$250K in a small bank, outlook not so good.

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Shaggy3.0

Shaggy3.0 1695

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4 hours ago, Incredulity said:

That's really not a good look.  yikes.

Actually, it's a good look---at the stupidity and stubbornness within the ruling class.  She's too old and not eloquent, like Mark Baum.  But at least she's telling the truth--the poors about to get screwed again.

https://www.youtube.com/watch?v=Bu2wNKlVRzE&t=62s

"I have a feeling, in a few years people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people"

-Mark Baum

That process started months ago.

 

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washparkhorn

washparkhorn 9974

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Killing off the local and regional banks hurts. The non-TBTF banks have a better understanding of the communities they serve. They promote local and regional economic development and job creation at a time when the US is re-shoring for more resilient supply chains—a national priority. 

Non-TBTF’s diversify risk and reduce concentration in the banking industry, which make the banking system more resilient and less prone to systemic risk.  

And we need the non-TBTF’s for price competition in our “capitalist” economy, ostensibly for lower costs and better service. 

Yellen and Powell - like their predecessors - protect the boys. 

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Snake Diggity

Snake Diggity 4716

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26 minutes ago, Mullet Free said:

I didn’t write the column.
 

BTC $1M won’t happen for a while, so I wouldn’t say “Get ready!”

You didn’t write the column.  But you did post its link in 2 separate places and said “plan accordingly.”  Congrats on being a complete fucking idiot.  Now kindly fuck off.

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Mullet Free

Mullet Free 39

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Posted
26 minutes ago, Neonmoon said:

No it’s not. Keep your pump and dump crypto bullshit on the crypto thread 

Yawn

 

26 minutes ago, Snake Diggity said:

You didn’t write the column.  But you did post its link in 2 separate places and said “plan accordingly.”  Congrats on being a complete fucking idiot.  Now kindly fuck off.

You should plan accordingly. Big things are happening.
 

Or don’t plan and be a complete fucking idiot. 

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Brisketexan

Brisketexan 107003

Posted
Posted
You should plan accordingly. Big things are happening.
 
Or don’t plan and be a complete fucking idiot. 

This post is worthless without telling me how many Jim Bakker Potato Soup Survival Buckets to stash in my basement for “the collapse that is coming any day now!”*

* And has been “coming any day now” since these same goldbugs were spewing the same stuff on the usenet 30 years ago. Follows the same pattern of the tabloid psychics who predict “a year of unprecedented disasters!”, and then get to point to whatever earthquake, hurricane, etc happened that year (as they do EVERY year) to say “see, I’m right! You should listen to me!”
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Captainant

Captainant 28592

Posted
Posted (edited)
9 hours ago, Mullet Free said:

You should plan accordingly. Big things are happening.
 

Or don’t plan and be a complete fucking idiot. 

I'm pretty sure this is the same pitch I heard on a podcast ad to buy gold lol. Miss me with that FOMO

Edited by Captainant
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HamsterHookah

HamsterHookah 112

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Quote

 

Like the two Christmases you get after your parents divorce, sometimes an institution collapsing can result in an abundance of spoils. Bitcoin prices climbed as high as $27,293 yesterday, wrapping up the cryptocurrency’s best week since January 2021. And it has Silicon Valley Bank and friends to thank for it.

Why is crypto getting a boost? Crypto diehards claim bitcoin’s gains are the result of people losing faith in traditional banking after SVB and Signature imploded (though it’s worth noting that Signature was a big player in the crypto world).

But there’s another possibility: After the second- and third-biggest bank failures in history, economists started second-guessing whether the Fed would stick to the plan to hike interest rates again or change course protect the rest of the very fragile banking industry. That could mean the crypto market, which slid into the dreaded Crypto Winter in the first half of last year because of macroeconomic factors like the Fed’s rate hikes, might finally be approaching spring.

 

 

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