Banks secret door for cheaper cash

[avikz]

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.

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[Helena Yu]

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.

[Litzki1990]

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.

[STT]

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

[Mr.right85]

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.

[blockman]

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.

[YUriy1991]

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.

[beerlover]

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?

[ChiBitCTy]

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.

[yhiaali3]

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.

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.

[Promocodeudo]

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.

[so98nn]

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.

[Parklane777]

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.

[slapper]

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

[itorai]

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.

[BenCodie]

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?

[Juse14]

"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?

[Motu_verse]

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  

[Parklane777]

"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.

[redsun114]

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.