Posted on 09/08/2023 6:58:28 AM PDT by Kaiser8408a
What a mess Biden and his Progressive backers have made. And we are forced to suffer the consequeinces of his policies. Or follies!
Money-market funds saw inflows for the 7th week of the last 8 with a $42BN jump (the most in 2 months) to a new record high of $5.625TN…
Source: Bloomberg
The inflow was dominated by a $24BN increase in Institutional fund assets while Retail also saw a sizable $17.7BN increase…
Source: Bloomberg
And the divergence between money-market fund assets and bank deposits continues to grow…
Source: Bloomberg
And while we actually saw huge deposit outflows (on a non-seasonally-adjusted basis) – despite The Fed’s seasonally-adjusted deposits increase – The Fed balance sheet shrank by another $20BN last week to its smallest since June 2021…
(Excerpt) Read more at confoundedinterest.net ...
Well, duh! The dumbest thing you can do during periods of inflation is hold cash. Gees...this clown makes this behavior seem like he’s discovered something new. It’s just people with one neuron still firing responding to economic conditions.
Yeh its called getting rid of the Fed.
The Treasury has to pay its bills. It can do it two ways: raise taxes, or tariffs, or borrow money. So, where to get the money, ah, the Fed markets securities for the Treasury and the cash comes pouring in as they raise rates to garner the cash.
Left unrestrained by any semblance of a budget or credit limit, we may have invented the perpetual motion money machine. Alas, there is one proviso that stops all machines eventually. In this case the friction of rising inflation rates eventually will stop the machine.
The Federal Reserve at this point is basically bankrupt. We are going to a new financial system very soon.
Maybe not, econjack.
My Father set up a small Trust for his children.
In July 2023, the overnight cash sweep account for the Trust was paying 4.98%.
The account - Reich & Tang DDM Cash Management - has been paying over 4% since January 2023.
The overnight sweep is usually in the range of $100K.
The Trust corporate and Treasury bond funds are paying 3%.
The poster at 5: said in early Spring 2021 that the US was going to a new financial system in a few weeks.
That’s not holding cash. That’s converting cash into an interest bearing asset for a very short period of time, but still not holding cash. Banks do this to avoid going to the “window” and borrowing at the Federal Funds Rate, as the Fed sees such borrowing as a sign of weakness. Banks often borrow millions from large companies overnight so they can meet their required reserves without going to the window.
I am writing about a Trust.
The Trust is holding $100K in cash.
The overnight cash sweep is paying 4.98%, on an annual basis.
That is higher than the current inflation rate, and it is higher than all the U.S. Treasury debt from 2 Year to 30 Year.
But the Trust is not leaving the cash idle in the account...at least, I hope not. I assume the Trust manager is investing the Trust’s cash each night.
I bought some REITs years ago when they were unpopular and those have been reliably paying me over 11% dividends since I bought them. (Their yields have increased on some to over 15% because of dividend increases over the years.) True, there’s more risk than sweeps, but the reward is considerably higher, too. It boils down to what makes you comfortable.
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