It’s Wednesday and a lot is going on. The RBA governor appeared before the Commonwealth Senate Estimates Committee today and demonstrated what a troglodyte he is, defending massive bank profits and deliberately trying to cause unemployment. Meanwhile, US data shows that inflation has peaked and is now falling. The pace of the deceleration is picking up. Meanwhile – MMTed – is active and our 4-week course began today (see details below) and we are helping a new radio show to launch next week – Radio MMT. And we cannot go a Wednesday without some great music. All in a day....William Mitchell — Modern Monetary Theory
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia
Banks could get an additional 1B in IOR from the Fed and it would accrue to capital as there is no liability... LHS: Reserve assets +1B, RHS: Capital +1B
ReplyDeletethe additional 1b capital could let them lend 10b to their own Hedge Fund ... LHS: Bank Loans +10B, RHS: Deposit liabilities +10B
Hedge Fund goes to the RRP at 4.55% risk free... Bank LHS -10B Reserve assets, RHS -10B deposits
Hedge Fund gets 4.55% on 10B or 455M...
Bank earns 455M on the additional 1B capital... 45.5% return on capital...
Risk free munnie… 🤑
Don’t need many people working there to keep track of it…. Lay everyone else off …
Need a bank license though…