Short term loan? 30 years is short term?
And 30 years of deflation of the value of the home.
But the money has increased in purchasing power, all houses are now 'cheaper' when you sell, and the money you get for selling it goes farther.
That is awesome. The home you paid $100,000 for, plus 30 years of interest, is now worth about $40,000. You might have been better off not spending the $100,000, plus 30 years worth of interest. I'll bet that money would be worth more than the $40,000 asset you own now.
Because you whine that increasing the purchasing power of money makes loans more expensive
Yes, deflation makes loans more expensive. First time you're hearing that?
I would rather the cost of borrowing be born by the borrower
And when the borrower defaults, borne by the bank. And the economy as a whole.
The "short term" loan on the house ends up costing 2.5 times as much in the last year of the mortgage, compared to the first year.
Is that a problem for you, or only for people who understand compound interest?
Do you want bailouts for all bad business investments?
No. And I don't want deflation to destroy good investments.
If your business needs loans to survive and mine doesn't, why should you get bailed out at my expense, and the expense of everyone else who has or earns a dollar?
Yes! We need deflation, to kill all businesses that borrow money! Now you get it. LOL!
I am aware of the money multiplier. That doesn't make 0% cash more profitable than a 1.87% bond, does it?
Who is loaning cash at 0%?
Nobody, but when the Fed gives JP Morgan cash, in exchange for their bond, they stop earning interest on the bond (the Fed owns it now) and don't earn any money on the cash (now owned by JP Morgan).
Now JPM Sec. can still spend the money they have received from the Fed,
Great, show me how they spend it that gives them the benefit of getting the money first.
while the Chase subsidiary makes more money loaning those deposits.
If they wanted to loan more money, they could have sold the bond, without Fed involvement.
But there wouldn't be any new deposits to loan, if the Fed hadn't printed up more money from thin air
As I said, they could sell the bond.
If you want to split hairs about the subsidiaries, you're only fooling yourself.
My comments had nothing to do with subsidiaries, only the claim that the primary dealer profits from having cash instead of a bond.
I've endeavored to address all of your questions. If we're to have this discussion I can only ask the same.
Why do you worry about the relative increased cost of a short term loan over the continuous purchasing power erosion of a lifetime of savings?
Computers, phones, pencils, or airplanes, the principal of capitalism is the same: Increase productivity to increase profits, reduce prices, and increase marketshare, or be replaced by those who do. Do you abhor competition as 'destructive'?
If your business needs loans to survive and mine doesn't, why should you get bailed out at my expense, and the expense of everyone else who has or earns a dollar?
Yes! We need deflation, to kill all businesses that borrow money! Now you get it. LOL!
That isn't an answer to the question. How do computer companies profit in an environment where they borrow to invest, and yet the price of the product they sell goes down at a higher than 3% annual rate? The answer is by being more productive, and hence more profitable, than their peers. The reality of the computer marketplace completely contravenes your expectations. Prices go down, consumers buy more every year than the last, and profits continue to be found.
And 30 years of deflation of the value of the home.
Again you confuse nominal price with value (purchasing power). Do you think a home purchased for $100k today is worth twice as much when it sells for $200k after 30 years of 3% inflation?
If they wanted to loan more money, they could have sold the bond, without Fed involvement.
You think they could obtain the same price, absent the Fed printing the money (thereby inflating the money supply) to meet their price?!
My comments had nothing to do with subsidiaries, only the claim that the primary dealer profits from having cash instead of a bond.
I explained to you how JPM uses subsidiaries to acquire and profit from the Fed's monetary creation. You asked how JPM profits, not how a particular subsidiary of JPM profits. This hair splitting only serves your point if you ignore that JPM owns the bank loaning the deposit, and the securities firm that counts the deposit as an asset.
Say the Fed buys $1 billion of 10 year Treasuries, yielding 1.87%, from JP Morgan. JP Morgan now has cash yielding 0%. How does this enrich them?