If banks are mostly investing in things that are riskier (and so higher-return) than Fed deposits, they should be able to pay interest that is higher than the rate on Fed deposits.
But in reality you get the reverse, as what the Fed is doing is basically paying bankers. If people could park money at the Fed the way they put cash in a vault, they'd probably pay a fee for the privilege!
> > If banks are mostly investing in things that are riskier (and so higher-return) than Fed deposits, they should be able to pay interest that is higher than the rate on Fed deposits.
Comical. That spread is for shareholders not for peasants. (As he adjusts the monocole)
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[ 3.5 ms ] story [ 28.3 ms ] threadThey are essentially substitute for banknotes, people have the right to have established a separation between transactional services and investing.
People right now are de-facto investing in the loan portfolio of their commercial banks
But in reality you get the reverse, as what the Fed is doing is basically paying bankers. If people could park money at the Fed the way they put cash in a vault, they'd probably pay a fee for the privilege!
Comical. That spread is for shareholders not for peasants. (As he adjusts the monocole)