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Originally posted by Ex_MislTech
Personally I think we are headed to WW3 slowly but surely.
The Fed handing out 3 trillion and then refusing to say to whom ?
"I think there has to be a REASON they are not loaning this money out. If the Gov gave me $25billion to play with and I could loan it out risk free (hell if I loose my bets, gov gives me more money since they proved we cannot fail..) .. I sure as hell would be loaning to anyone who wanted a loan!."
Before we discuss the next step the Fed has taken in its undeterred will to unlock credit in the economy, let's pause for a second to look at a potential unintended consequence. If you are a bank and don't like to lend to the private sector, but are awash in cash, what do you do? You can deposit the cash at the Fed and earn 1% interest; you can buy Treasury bills and earn approximately zero; or you can lend money to --- the government. In our view, it seems a logical conclusion for banks to buy longer dated Treasury bonds. Banks are in the business of borrowing short and lending long: typically, banks would have deposits (short-term loans from depositors, callable at any time) and lend to finance long-term projects. This may well be the greatest carry trade of all times, except that it has neither credit, nor currency risk; it does have interest risk, i.e. if long-term interest rates go up because the market prices in the risk of inflation, then banks could lose money
Originally posted by MischeviousElf
reply to post by stander
Mmm I don't know what the Images mean?
Originally posted by projectvxn
Quote me on this later:
US Government will be in default by the end of the 2Q 2009 due to a credit rating drop once the credit card tsunami hits.
It has already started. There are too many hands open for the handouts, and they will not end.
We will start seeing the true effects of Economic Depression in '09, then it's ugliness from there.
I'll bet my net worth on it....Won't do me much good when money becomes worthless anyway.