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The relationship between the 2 and 10 is what matters vis a vis predicting recessions. Your numbers - which were correct as of COB yesterday - do not show a 2 v. 10 inversion.
That's one way to measure an inversion, but it's not the only way. Any time a longer dated bond is priced lower than a short term bond, that's an inversion. It's a clear signal that the markets are disturbed.
Banks' ability to create money through customer deposits has been diminishing at various rates for decades. As mentioned, the bond market, and wholesale money markets, have superseded banks.
Still, banks play a vital role, especially in the payments system, yes, a major component in the lifeblood of the economy.
I don't recall anyone mentioning higher levels of reserves; my impression is that banks are having difficulty in maintaining current reserve requirements.
However, reserve requirement do change, but the rules and math are very complex, beyond the scope of a forum designed for quick quips and gross summaries on the fly.
You would need to study Basel III rules, I believe, as well as Federal Reserve application of those rules and its own rules.
Good luck wading through that!
Yea but why are banks on edge and don't want to give out loans to other banks and investors unless the fed inject money?
So you are saying federal reserve that prints money or doing the repo to the banks and market is not run and controlled by the government but is private?
That's one way to measure an inversion, but it's not the only way. Any time a longer dated bond is priced lower than a short term bond, that's an inversion. It's a clear signal that the markets are disturbed.
So you are saying federal reserve that prints money or doing the repo to the banks and market is not run and controlled by the government but is private?
1. The Federal Reserve does not print money. Please stop claiming that it does.
2. The Federal Reserve is the central bank of The United States as per The Federal Reserve Act of 1913.
3. Every functioning economy on Earth has a central bank.
Yea but why are banks on edge and don't want to give out loans to other banks and investors unless the fed inject money?
What is going on with these toxic loans?
Money markets are a key source for borrowing by Industry and Business as to finance their day to day operational expenses. Wild swings in rates poses risks to investors and banks who provide cash to Industry and Business in exchange for securities or collateral. The Fed injects money into the repo market as to stabilize rates, preventing wild swings in interest rates that could freeze borrowing and lending in the markets in case pledged securities and collateral plunge in value due to panics and crises .
The Fed sometimes play the role of investor in case of spikes of sudden high demand. High demand can come from the need for industry to finance a drastic increase of inventories due to panics such as the current coronavirus pandemic.
That is just a simplistic condensed explanation because to completely explain this will take too long.
What is this repo or quantitative easing? Some thing is wrong with the stock market?
The banks need new money to move around or create credit/debt around. That is how they justify paying themselves a fee in the form of a chunk of that new money. That is one way bankers make money.
The Fed created money out of thin air to swap for a like amount of Banks' debt paper during QE's.
Technically its the Bureau of Engraving and Printing
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