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Banks are So Stuffed With Cash They Tell Companies: No More Deposits

edsl48

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Banks are so overloaded with cash they are losing money on deposits.
No More Cash Please
Some banks, awash in deposits, are encouraging corporate clients to spend the cash on their businesses or move it elsewhere. It's a strange case of "No More Cash Please".
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U.S. companies are holding on to billions of dollars in cash. Their banks aren’t sure what to do with it. Some banks are encouraging corporate customers to consider alternatives.
Top of mind for many big banks is a rule requiring them to hold capital equivalent to at least 3% of all assets. Worried about the rule’s impact during the pandemic, the Fed changed the calculation in 2020 to ignore deposits the banks held at the central bank, but ended that break this March. Since then, some banks have warned the growing deposits could force them to raise more capital, or say no to deposits.
“Raising capital against deposits and/or turning away deposits are unnatural actions for banks and cannot be good for the system in the long run,” Jennifer Piepszak, then-CFO of JPMorgan Chase & Co., said on a call with analysts in April.
One strategy is reverse tiering, giving clients lower yields for additional deposits. Asking customers to move some funds to another, smaller bank also is an option, said Pete Gilchrist, an executive vice president at Novantas Inc., which advises banks.
In recent months, banks including BNY Mellon have focused on moving clients from deposits into money-market funds. The money-market funds, in turn, need new places to park all that new cash and earn some interest. But rock-bottom interest rates have pushed them into storing it back at the Federal Reserve overnight, in a facility that pays them zero return and had been largely ignored for the past three years.
Nonsensical QE
Bear in mind that the Fed, via QE has been stuffing banks with cash for a year at a rate of about $120 billion a month.
Not only do the banks have no use for it, it's starting to cost them money.
The Fed's solution, using the word loosely, is to do reverse Repos draining banks of cash.
Reverse repos topped $500 billion this week, effectively undoing over four months of QE.
The Fed Says This Was Expected
Wolf Richter also notes Fed’s Reverse Repos Hit $503 Billion. Liquidity Drain Undoing over 4 Months of QE
What really caught my eye was Fed statements as noted by Richter.
New York Fed President John Williams emphasized repeatedly that the reverse repo system “was working really well,” and that there were “really, no concerns about that. We expected that to happen. It’s working exactly as designed."
Amazingly,
  1. The Fed crams half a trillion dollars down banks' throats.
  2. Banks tell corporations no more deposits because they are losing money on them. Alternatively banks have to raise capital.
  3. So corporations turn to money market funds.
  4. The money market funds do not know what to do with the cash either.
  5. So the Fed is forced to take a half trillion dollars back.
  6. This was expected and is working exactly as designed.
Thank You Fed!
Meanwhile, please note The Fed Says Inflation Is Transitory, It Has a Vested Interest to Lie
 

the_shootist

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Banks are so overloaded with cash they are losing money on deposits.
No More Cash Please
Some banks, awash in deposits, are encouraging corporate clients to spend the cash on their businesses or move it elsewhere. It's a strange case of "No More Cash Please".
View attachment 213538

Nonsensical QE
Bear in mind that the Fed, via QE has been stuffing banks with cash for a year at a rate of about $120 billion a month.
Not only do the banks have no use for it, it's starting to cost them money.
The Fed's solution, using the word loosely, is to do reverse Repos draining banks of cash.
Reverse repos topped $500 billion this week, effectively undoing over four months of QE.
The Fed Says This Was Expected
Wolf Richter also notes Fed’s Reverse Repos Hit $503 Billion. Liquidity Drain Undoing over 4 Months of QE
What really caught my eye was Fed statements as noted by Richter.
New York Fed President John Williams emphasized repeatedly that the reverse repo system “was working really well,” and that there were “really, no concerns about that. We expected that to happen. It’s working exactly as designed."
Amazingly,
  1. The Fed crams half a trillion dollars down banks' throats.
  2. Banks tell corporations no more deposits because they are losing money on them. Alternatively banks have to raise capital.
  3. So corporations turn to money market funds.
  4. The money market funds do not know what to do with the cash either.
  5. So the Fed is forced to take a half trillion dollars back.
  6. This was expected and is working exactly as designed.
Thank You Fed!
Meanwhile, please note The Fed Says Inflation Is Transitory, It Has a Vested Interest to Lie
Pretty soon the cash will be blowing in the gutters of American cities. I suspect it won't even make good toilet paper
 

TAEZZAR

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DodgebyDave

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I will gladly accept any monetary deposits that anyone cares to
 

gliddenralston

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This story is a little suspect...when I'm out in public all i see are credit/debit/ebt cards...besides that your a criminal if ya use cash.
 

Casey Jones

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Bitcoin.

That's the new tool. Just ask the Treasury or the Fed.

First, Citizen Pipeline, and then, JBS. Of course, they got partial recovery of all that bitcoin; and of course, it was nearly the exact-same amount of ransom...anyone doubt FOR A SECOND this was two staged False Flag events?

(saw a discussion on ZeroHedge last night; today it's wiped from the index...go figure)

I'm anything BUT a bitcoin bull; but one reason I've stayed clear is that I figured the goobers in goobermint would put their feet down. But I never figured they'd do it with a False-Flag Fake-Nooze series of events...
 

gliddenralston

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Voodoo

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They are whining because they can't make any money on the extra cash. So what guys, just do your job.
 

Scorpio

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hey up Glidden,

when they speak of cash, it is not as you and I would think of it,
as in it isn't really cash, it is highly liquid instruments and digits,

we have brought attention to this for some time,
corps sitting on massive cash balances on their balance sheets,
so much cash rolling in, they don't even know what to do with it
 

Buck

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that's the same problem the Oracle has, he's got all his clients money tied up in money...he's got nowhere to go with any of it

makes me wonder how he pays out dividends on those cash accounts

and he's an investor of cash...
 

AgBar

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This story is a little suspect...when I'm out in public all i see are credit/debit/ebt cards...besides that your a criminal if ya use cash.
Oddly enough, and this surprised me, I was told "cash only" at a local pizza place when I stopped in for a couple of slices the other day. "All of our systems are down, so we can't process credit cards or even take phone calls."

"Oh, but there's an ATM in the corner." (which makes sense, it's right near a local college and one of the bar strips, so drunk kids at 4 AM is a good market)

(but...ok...so I guess the ATM is on a different network?)
 

TAEZZAR

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GOLDBRIX

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This story is a little suspect...when I'm out in public all i see are credit/debit/ebt cards...besides that your a criminal if ya use cash.
IDK about your area but here in the Cincinnati - Louisvile Region of Kroger if you check out with a debit card and want cash back they want to charge you $2.00 transaction fee. You can spend $200.00 for groceries but if you want $20.00 cash there is a charge for it. WTF ?
 

rte

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IDK about your area but here in the Cincinnati - Louisvile Region of Kroger if you check out with a debit card and want cash back they want to charge you $2.00 transaction fee. You can spend $200.00 for groceries but if you want $20.00 cash there is a charge for it. WTF ?
Quit using your debit card and start using your credit card.
 

Scorpio

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look at it realistically guys and gals,

trillions pumped in worldwide, and all of that heads to the same place

some of it makes it to the slaves, gets spent, goes to the corps, goes to the banks
some of it goes to the slaves, a bit of it gets saved or put into the casino stock market, but it too ends up at the same place, in the control of corps

some goes to .govs, gets spent, and goes in the corps accounts,
some goes straight to the corps from .gov

the point being, it is all ending up in the same places under the same control

in effect, completely pointless as these corps and these banks have/had enough fiat already at their disposal to take over whole countries,

and now the banks are so flush with this garbage returning that they are charging fees to even accept it

banks all across the country are sitting on mountains of fiat that they try to lend out, but it just keeps coming and coming,
house prices go up 100k a piece x millions of units, and still not enough to absorb the fiat creation.

Even if 1 million houses go up 100k a piece, that is still only 100B used up and lent out or accounted for. That still leaves 14.9T swimming.
or basically 150M houses with increases of 100k each unaccounted for.

For 2021 there is only a expectation of 863,000 homes sold. You can kind of get an idea of what we are speaking to.

Those slave payments, or 'stimmies'?, but a drop in the bucket of total fiat unleashed on the world.

Seriously guys, this is big stuff we are talking and the dislocations are monumental
 

ttazzman

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Since it's all electronic, anyway, I wonder what their problem is.
Cash is a liability in bank accounting....loans out are assets...cash they hold they have to fdic insure..pay minimal intrest , etc.....years ago when I held large letters of credit etc I had a banker tell me cash they hold cost them 2% +/-....its probably cheaper now but it's still a liability on their balance sheet
 

Casey Jones

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If you mean profit not realized, that's not the same as a loss.

Last time I checked, banks were SUPPOSED to HOLD MONEY.

I guess not...I guess now it's where the Fed dumps its printed/digitized fiat, for junior banksters to pour into the DOW and S&P in their house accounts. Pay themselves fat commish...sell to repay short "loans" and then repeat, commissions all the way.

Actual customers with cash to deposit, interfere with this vital work the banksters do.
 

Buck

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Quit using your debit card and start using your credit card.
they keep upping my limit...i pay them off and they up it again
 

Buck

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look at it realistically guys and gals,

trillions pumped in worldwide, and all of that heads to the same place

some of it makes it to the slaves, gets spent, goes to the corps, goes to the banks
some of it goes to the slaves, a bit of it gets saved or put into the casino stock market, but it too ends up at the same place, in the control of corps

some goes to .govs, gets spent, and goes in the corps accounts,
some goes straight to the corps from .gov

the point being, it is all ending up in the same places under the same control

in effect, completely pointless as these corps and these banks have/had enough fiat already at their disposal to take over whole countries,

and now the banks are so flush with this garbage returning that they are charging fees to even accept it

banks all across the country are sitting on mountains of fiat that they try to lend out, but it just keeps coming and coming,
house prices go up 100k a piece x millions of units, and still not enough to absorb the fiat creation.

Even if 1 million houses go up 100k a piece, that is still only 100B used up and lent out or accounted for. That still leaves 14.9T swimming.
or basically 150M houses with increases of 100k each unaccounted for.

For 2021 there is only a expectation of 863,000 homes sold. You can kind of get an idea of what we are speaking to.

Those slave payments, or 'stimmies'?, but a drop in the bucket of total fiat unleashed on the world.

Seriously guys, this is big stuff we are talking and the dislocations are monumental
and this is an outcome i didn't think would be an issue, but a shuttered economy doesn't make for a good enough reason to take out a new loan...

the velocity is so slow it's choking the banks


edit: i forgot

:rotf::rotf::rotf::rotf::rotf:
 

ttazzman

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the real question of this thread is......if banks are choked with cash on hand..........why arnt they loaning it out .....IE offsetting the liability of cash with a asset of a loan.....

lack of suitable borrowers?
lack of need from borrowers?
regulations limiting lending?
???

the natural state of a bank is to offset deposits to the full limit of the law with performing loans ....there has to be a reason they wont or cant lend out those excess $ deposits .........that is the real question to be answered
 

Buck

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the day i can walk into a bank / cu and walk out with a 5 year note at 2% is the time i'll go shopping for a note

they won't do that...
 

ttazzman

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the day i can walk into a bank / cu and walk out with a 5 year note at 2% is the time i'll go shopping for a note

they won't do that...
during the time i talked to that banker that said their liability cost on holding cash was about 2%.......the prime corporate lending rate for me was about 5% ......not sure but consumer rates were quite a bit higher
 

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hey ttaz,

a great point for sure re demand or lending,
is it possible that the sheer volume of available is overwhelming demand?

I haven't heard anything where banks are tightening,

Then there is supply, where corporations and .gov have inserted themselves into the domain of banking,
ie adding supply to meet demand for businesses and retail persons
 

brosil

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IDK about your area but here in the Cincinnati - Louisvile Region of Kroger if you check out with a debit card and want cash back they want to charge you $2.00 transaction fee. You can spend $200.00 for groceries but if you want $20.00 cash there is a charge for it. WTF ?
That's an ATM fee they are charging. It's more common than you would think.
 

Fatrat

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Pretty soon the cash will be blowing in the gutters of American cities. I suspect it won't even make good toilet paper
It doesn't but better than nothing.
 

ttazzman

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hey ttaz,

a great point for sure re demand or lending,
is it possible that the sheer volume of available is overwhelming demand?

I haven't heard anything where banks are tightening,

Then there is supply, where corporations and .gov have inserted themselves into the domain of banking,
ie adding supply to meet demand for businesses and retail persons

absolutely it could be overwhelming supply ....... i really dont have a "feel" for demand .......could be as simple as demand is there but availability of typically financed purchaseable items is limited IE shortage of Homes and Cars etc
 

Treasure Searcher

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Interest is a pittance. Entity that I am Treasurer of, has $140,000 in an interest bearing business checking account. Last interest payment for one month was $6.00.

If that $140,000 was in an interest bearing account in the 1980's, it would have been making big bucks interest.
 

the_shootist

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I'm divesting FRNs as fast as I can. You guys are killing me!
 

Scorpio

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You guys are killing me!

we is just talkin' shoot,

don't a go off and throw out the mini slave too...........(for those more pc, baby/bathwater)

:oriental: