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Jamie Dimon Stockpiles Cash, Thinks Inflation is Here to Stay, Fears PayPal

Jamie Dimon, CEO of JPMorgan Chase, has some interesting opinions on inflation and bank-related topics.
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Jamie Dimon CEO of JPMorgan

Stockpiling Cash

Jamie Dimon says he is stockpiling cash because there's a  ‘Very Good Chance’ Inflation is Here to Stay.

Key Ideas 

  • “We have a lot of cash and capability and we’re going to be very patient, because I think you have a very good chance inflation will be more than transitory,” said Dimon, the longtime JPMorgan CEO.
  • “If you look at our balance sheet, we have $500 billion in cash, we’ve actually been effectively stockpiling more and more cash waiting for opportunities to invest at higher rates,” Dimon said. “I do expect to see higher rates and more inflation, and we’re prepared for that.”
  • Dimon warned that banks were under threat from fintech and Big Tech players including PayPal, which has a larger market capitalization than nearly all U.S. banks.
  • Dimon disclosed that the bank’s automated investing service You Invest has garnered about $50 billion in assets, despite the fact that “we don’t even think it’s a very good product yet.”

$500 Billion in Cash

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That JPMorgan has $500 billion is cash is not really an inflation story. Rather, it's a function of Fed policy.

  1. The Fed via QE has crammed cash down the throats of banks, suppressing yields.
  2. Banks in general, not just JPMorgan, have a dearth of qualified borrowers seeking loans.

Regarding point 2, banks do not lend from reserves or deposits. Banks lend when they have qualified customers seeking loans. 

Even if Dimon believes the inflation setup, I do not buy his story as he presents. He could have and should have mentioned the QE aspect as to why banks are sitting on cash.

For discussion, please see Banks are So Stuffed With Cash They Tell Companies: No More Deposits

Mish