I don't see how forcing newly created non-risk assets onto bank balance sheets is going to help correct a real hygiene problem...
China’s central bank will inject CNY1.2 trillion (USD170 billion) in tomorrow’s open market operation, the bank said in a notice today. The move aims to provide sufficient liquidity for the financial system during the period of controlling the novel #coronavirus epidemic. pic.twitter.com/KQUUOCkd2i
— Yicai Global 第一财经 (@yicaichina) February 2, 2020
5 comments:
So it's not just in the West where the politicians and bureaucrats who control the money pringing press distribute freshly printed money to their friends in the banking industry rather than to Main Street....:-)
Ralph if they buy the assets off of the non-bank sector those non-bank entities get a deposit account balance at a bank for their former govt securities account at a bank so it can be exactly opposite of what you are saying...
Banks get both a new Asset (the Reserve Assets) and a new Liability (the customer deposit account) so banks do not benefit if fact this depresses the bank leverage ratio and it retards the bank's ability to provide additional credit...
No surprise that China is down 8% today even after this "pumping!" or wtf the Monetarist morons call it.. probably made it worse...
Ralph if govt forces a transaction upon the banking system that increases BOTH bank Assets and Liabilities how is that helpful to the banks? How is that "giving them money!" ? How is that "giving" the banks anything?
Retained Earnings or Shareholders Equity at a bank is (A-L) it doesnt change if both A and L increase an equal amount... how is this then helpful?
if govt forces a transaction upon the banking system that increases BOTH bank Assets and Liabilities how is that helpful to the Franko
Maybe in China they can force an asset swap but in the US I suspect the process is for the Central Bank to OVERPAY for bank assets - and that does increase equity, i.e. is a gift.
“I don't see how forcing newly created non-risk assets onto bank balance sheets is going to help correct a real hygiene problem”
You mean where sewage is let out among playing kids in the US making them sick in deceases that used to be gone long time ago...
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