“Bear in mind that the Fed, via QE has been stuffing banks with cash for a year at a rate of about $120 billion a month.
Not only do the banks have no use for it, it’s starting to cost them money.”
Newton wins again. For each action, there is an equal and opposite reaction. Money has gotten so cheap, they can’t afford it.
Carl_R
2 years ago
Businesses could, of course, either do a one-time dividend or a stock repurchases (which are mathematically identical), but that would just push the cash somewhere else. Those who received the dividend, or those who sold the shares would then have the cash, and some would end up in banks. In the end, if money supply increases dramatically, you either are going to get inflation, or the velocity is going to have to fall (i.e. money parked in banks, or somewhere else).
Too much BS
2 years ago
Lumber Yard monthly news letter: Framing package that was $50,000 last year is now @ $250,000 and you have a long wait to get your pasckage. Lots have excavated holes that are waiting and waiting for Framers and lumber. and the boom party goes on. link to youtu.be
There are bubbles everywhere and not a pin to spare..
Just buy the s&p500 and go along for the ride. No use trying to fight this. I sat on ~100% cash from 2008 till early this year. Now I’m in the market. The fundamentals never made sense and now I’m literally in the poor house compared to my “ignorant” friends and peers who were in the market all along.
Cocoa
2 years ago
Well does anyone want to borrow a trillion bucks, with all asset classes going crazy and at their highs. Is there a decent “investment” anywhere out there with value?
A self sustaining space station, one big enough for you and your immediate family (say up to half dozen more).
Not subject to taxes, confiscation, break-ins, wars, pandemic’s etc.
For reference, Wikipedia says the international space station cost 150 billion so you could buy quite a bit more and still have some $ left over to get shuttle service to/from earth when needed.
If you need to generate some $, rent some space on yours to scientists / science projects.
Doug78
2 years ago
“Companies” is a too general term. I would be interested in which companies have too much cash and why do they have it. Is it due to a few companies being cash rich or is it widespread across sectors? I suspect it is concentrated. If banks have no use for the funds shows that there is a lack of decent investments in productive projects. It could also explain why real estate is going up everywhere because it’s the only place to put your money.
They have too much cash because their tax payments aren’t high enough!
ThaomasH
2 years ago
And what is wrong with any of this? The TIPS breakeven rate is pretty near the Fed’s target for the price level trajectory. Seem to be working OK so far.
dbannist
2 years ago
I will happily take that half trillion dollars off the hands of the banks. I’ll even pay them a half percent interest rate.
I’ll invest it in rental property, including farmland.
Eddie_T
2 years ago
OT….I read this and thought it was interesting. Rich people are bailing out of China, India, Russia, Hong Kong, and Turkey. Looks like Australia is claiming a lot of them……which is interesting, because I don’t think of Oz as a tax haven. I suppose that depends on their loopholes, which I know nothing about.
I don’t really worry about the dollar unless is goes above 120 or below 75. At either extreme it means something bad for me. The usual ups and downs are just something to trade on.
Since when is this news? And ZeroHedge has lost credibility long ago.
In truth, ZeroHedge smarly figured out that with central banking cartel’s print-forever, there is barely any space for market analysis, and went tabloid.
Sorry, I thought it might be of interest. Demographic trends are ongoing, and worth paying attention to, imho. It’s just a blog article, not something the Tyler Durden’s wrote.
I know all about the rise and fall of ZH. I’ve been reading it for as long as I’ve been reading Mish, which is way more than a decade. In general…….I think your point is well made, but they do still occasionally put up things that are of interest to me. And they have a habit of exposing things that are being swept under the rug, just like the lab leak hypothesis.
You have to use your critical thinking skills when you read ZH….but I try not to throw out the baby with the bath water. I can make my own judgments about their bias, which is huge….and I look for confirmation elsewhere on all their reporting before I take it too seriously.
I’ve learned to avoid anything written by Michael Snyder (the doom king) as every article the guy writes is full of doom porn and hyperbole. ZH does have quite a bit of valuable stuff on it though, once you know how to weed through it.
And they are much faster at getting urgent news out than the major networks.
There used to be a lot of Michael Snyder types on the internet, but civilization has managed to hang on until most of them aged out.
My own bias is fairly negative toward fiat money, globalization, the coming end to cheap energy, and all the rest of it. But I believe in living the life you’ve been given, and not hiding in a cave somewhere, and writing doom-and-gloom articles. Whatever happens, my intention is to survive, thrive, and get whatever lessons I need to learn out of this incarnation. We are all here for some reason…there is always a purpose in life if you look for it.
Agree. It’s the same with other finance/economics sites. Everybody has capitulated and waits for the end game. The end game which has not been articulated by the banking and political overlords because they don’t have a clue, either.
ZH is a great aggregation site for articles. Such a site CAN’T lose credibility because very little is actually written by the principles there. I think perhaps the market analysis posts might be but 95% of what you’ll find there is sourced from other sites. If you look closely at the articles, you will usually find a linkout somewhere to the original article that they copied from. I think doing this helps them stay on the legal side of things.
Just use ZH as an RSS feed and stay away from the comment section on each article.
Agree that the same laws protect ZH as Google, and Yahoo.
And I am not disparaging ZH; they are the only mass site that allows comments when almost every mainstream site shut them down. In the gone comment sections, you learned things the great controllers deemed too close to the real thinking of the population, and in stark contrast to the propaganda piece that was the article .
My main problem with ZH is the elimination of news categories, and many great commenters left the site over time.
Eddie_T
2 years ago
Glad somebody has plenty of cash. Not Main Street mom & pops. They’e going out of business because the price of wages and their other costs are rising way faster now than they can raise the prices of their goods and services. The continued Fed policies are going to wipe the rest of the little guys out, for the most part.
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“Bear in mind that the Fed, via QE has been stuffing banks with cash for a year at a rate of about $120 billion a month.
Not only do the banks have no use for it, it’s starting to cost them money.”
I’ll invest it in rental property, including farmland.
I’ve learned to avoid anything written by Michael Snyder (the doom king) as every article the guy writes is full of doom porn and hyperbole.
ZH does have quite a bit of valuable stuff on it though, once you know how to weed through it.
And they are much faster at getting urgent news out than the major networks.