>banks post 2008 have a regulatory obligation to hold high quality liquid assets>one of the highest quality liquid assets are government bonds>American government bonds are usually at 0% risk of losing value>banks purchase these bonds at whatever price and are used as collateral during stress testsDoes this not essentially mean that the banking system in itself is enabling the American government to run at a deficit? If bonds are the safest assets out there, does the government then essentially support the banking system by running on deficits? Am I understanding this right?
the government is just a cash cow for the chosen, goynow go play with your digital coins
banks print money. speed is up to the interest rate.
>>61892720I've just read that the reserves granted to commercial banks from central banks make up the majority of those high quality liquid assets, while bonds come in second. I didn't know exactly how they were spread out, but apparently, bonds can make up a total of 40% of the safe assets that a bank holds. And that's a large number. But even still, government's deficits far exceed anything that commercial banks hold in bonds. Or at least, that is what I'm assuming.fact check just now: Apparently the entirety of the banking system are able to sustain government spending for about 3 years. That is actually insane. Presented to me as ''only'' 3 years. It's massive, actually.
What ever happened to the free market? Bonds have a guaranteed buyer at any given price, deficits are being financed by commercial banks as well as central banks. Any type of asset with a ''guaranteed buyer'' is the polar opposite to anything anyone has ever been told about the free market. That, along with the fact that reserves can be created, scarcity also goes directly out of the window. What a fucking system. It's not even ''distorting the market'' it's instead doing away with the entire market itself. Price signals are one of the core concepts drilled into the heads of just about any person who wants to become literate within finance, and yet we have assets with guaranteed buyers regardless of price. What fucking market is there without price signals?
They are restricted on how many bonds they can hold
>>61892945if they can make up 40% of the total most safe assets that they possess without meeting any type of regulatory constraint, it is still a very large amount.
>>61892934You're describing the state of affairs under financial repression
Classic libertarian schlock thinking, you're not required to hold bonds for reserves and can just hold reserve balances if you want, or you can only hold bonds up to a determined free market viability based on multiple signals you would already use to trade bonds if we're getting real crazy about it. You're also not required to even bank in USD, given we let foreign banking branches open domestic branches and given we let banks let anyone be the ultimate beneficiary of their reserves. You do realize the entire point of banking is to arbitrage yields better than (you) can right? Generally this line of thinking devolves into boomers bemoaning banks not pumping their precious metal bags for them kek
>>618925751) yes, its all an amerigolem rigged game and 2) the assets they have to hold is in the low 1-4% lol
