Peter, Goldman isn't borrowing at the Fed funds rate. Bankers aren't stupid. This is why the money is at the Fed in the first place, as those that get the funds aren't stupid enough to loan it to Goldman, BAC, C, JPM, WFC and all the other crapshoots called financials. Goldman would repo their own t-bills, but they still have to cover the liabilities. That is what Benny Bucks is for, to keep pushing money out there so these bankrupts don't have to pay a legitimate rate to borrow in the real market. If these banks weren't a risk, you wouldn't see this money at the Fed. 100% of it and more is already owed.

Anyone who doesn't understand the purpose of QE is to cover up the insolvency of the big banks is just flat ignorant of how things work. To not QE would force these insolvents into the legitimate market and we would have another credit crunch. Banks were running the system on their own credit and their credit failed. THERE WERE NO RESERVES WHEN THIS MESS STARTED They were merely trading their own credit and once the credit of a couple of sizable banks were called in question (Notably BAC and C, but probably all of them), the chain of credit broke down. The same thing is going on in Europe right now.

As far as the income the Fed is paying? .25% is $2500 on $1 million. This means if you have $40 million, you can draw enough interest to live a moderate middle to upper middle class lifestyle, depending on what else you have paid for. There isn't exactly a lot of people with $40 million, maybe 50,000 at best.

If you figure the typical account has $10,000 in it, $1.5 trillion represents 150 million accounts. Think these accounts don't cost $10 each?

If this is a subsidy, it isn't one for the banks with the deposits. It is a subsidy for the TBTF banks who are responsible for this money in the first place. The Fed is creating this money to give them time to make their **** into shinola and so they don't have to borrow these funds out of the secondary markets. Again the banks with these funds, which they owe their own depositors who receive funds derived from crooks on the other end of the banking scheme aren't getting rich by any means.

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The fact you mention Treasury Direct as a refuge from financial repression indicates you have zero understanding of it.

I was merely asking where KD was putting his short-term investable cash seeking a safe (on a relative basis) return, or was he forfeiting that return for a perceived safe spot and receiving no income whatsoever. He never answered that question, incidentally. Thank you for the useless post though!

Return? None. Return OF Capital my friends.

Terrific, thank you, that's helpful

As far as Congress, Obama, blah-blah, TBTF and everyone else I have but one comment: "If you want to make God laugh, make a plan." All these mascinations (sp?) and shinanigans (sp?) are nothing but running from pillar to post. What comes, comes. "Get in, sit down, shut up and hold on."

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But at the same time you have to enact a constitutional amendment that says the government can not spend, except in war time, more than it collected the prior year.

No exceptions. End these protected "Wars on Whomever" that we get involved in by not funding them in the first place, or making sure we save up for them ahead of time.

In case of actual invasion, then it's an all-out free-for-all as far as I'm concerned.

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Return? None. Return OF Capital my friends.

The return is actually negative when factoring in inflation. So that strategy guarantees a loss.

Your assumptions are showing.

What I said was perfectly valid unless you are willing to disclose the contents of your portfolio.

Investing in US goverment bonds (maybe the exception of I bonds) guarantees a loss due to inflation. Government bonds that yield dramatically less than inflation is the prime example of financial repression.

Corn -

Your assumption is that inflation is what will eventually happen.

Lots and lots of reasons to believe that is not the likeliest of outcomes.

I repeat: Your assumptions are showing.

I will note that the last time I did this I bought assets at roughly a nickel on the dollar and made my nut doing it, and at that time the financial situation facing us was far LESS dire than it is this time.

I've got a history of being able to do this and being right in doing so, and I'm patient.

Well, when it comes to finances I'm patient. When it comes to someone who's been trying to find out whether I'll hit them with the ban hammer for the last several months, maybe not so much.

I don't see any deflation if that's what you're alluding to.

I need more dollars every year to maintain my standard of living.

Compounding inflation losses are not insignificant at this point.

Corn- well maybe then you're perfectly comfortable getting 4, 5 or even 7 or 8% as you go down in credit quality and approach the junk bond variety in order to maintain your standard of living and your anticipated further inflation, but then again, maybe you'll get those returns for a few years and then get nailed by a 20, 30 or even 50% decline as that credit quality and spread from treasuries comes back to bite you. Feelin' lucky? Maybe we should call you Icarus?

Corn go to Vegas! At least you'll enjoy getting screwed and it will be you doing it to yourself. Hell you might even win!

Themortgagedude wrote:

But at the same time you have to enact a constitutional amendment that says the government can not spend, except in war time, more than it collected the prior year.

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Ckaminski wrote:

No exceptions. End these protected "Wars on Whomever" that we get involved in by not funding them in the first place, or making sure we save up for them ahead of time.
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Agreed!

If war time were an allowed exception, we would forever be at war.

All animals are equal, but some animals are more equal than others... exceptions are the root of so many of our problems.

Well at least the Japan chart exonerates Bernanke as being on a path to stable prices and any inflation as being transitory.

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Corn- well maybe then you're perfectly comfortable getting 4, 5 or even 7 or 8% as you go down in credit quality and approach the junk bond variety in order to maintain your standard of living and your anticipated further inflation, but then again, maybe you'll get those returns for a few years and then get nailed by a 20, 30 or even 50% decline as that credit quality and spread from treasuries comes back to bite you. Feelin' lucky? Maybe we should call you Icarus?

We are looking at ZIRP as far as the eye can see. It sucks, but that's the reality of the situation.

Buying T-Bills that pay 0% is poor advice. That cash is declining in value with each passing year. So you are making a financial decision whether you see that or not. Cash is an investment like anything else.

Escaping financial repressions (or an attempt to do so) does not involve lending the entity that is repressing you money at 0%. Everything in Treasury Direct (with the exception of I Bonds, but you can only buy $5K/year) is guaranteed 100% to lose you money and lower your standard of living.

I have seen literally no deflation with the exception of housing and even that is still stubbornly expensive.

^^ The only indicator of deflation I've seen in the past 3 years, besides housing, is in wages/hours worked of the 99%.

While I too am extremely interested in return OF capital, there will be far less capital at all if I can't make some small % on the most of it, because my expenses are going up at an average of ~10%+ per year - gas, food, all types of insurance. And, lending my money at almost 0% to the same entity that represses me, lies to me, and steals from me is just very wrong. Yet there's no place to go to make anything at all for the money you really don't want to risk.