tag:blogger.com,1999:blog-2098432983500045934.post7538076116026979971..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Let's look at the quiet time.The Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2098432983500045934.post-27690491471183825792016-04-04T07:57:57.897-04:002016-04-04T07:57:57.897-04:00Jim,
Seems you are right. My bad. The Treasury pro...Jim,<br />Seems you are right. My bad. The Treasury program insured the funds on a limited basis. Not the FDIC. https://www.finra.org/investors/alerts/treasurys-guarantee-program-money-market-mutual-funds-what-you-should-knownanutehttps://www.blogger.com/profile/04526158764171117978noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-92085714124007113552016-04-04T07:48:34.095-04:002016-04-04T07:48:34.095-04:00I have not seen anything that suggests any involve...I have not seen anything that suggests any involvement of the FDIC.<br />The US Treasury initially bailed out the MMFs using money from the Exchange Stabilization Fund. <br /><br />And following that the Fed came up with a whole slew of lending programs that make up that spike in the graph Art posted. <br /><br />Look up Term Auction Facility (TAF), Term Securities Lending Facility (TSLF), and Primary Dealer Credit Facility(PDCF). All of which allowed financial institutions to put up assets from MMFs and get loans. <br /><br />Then came Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF) which was directly targeted at loans to prop up the MMFs.<br /><br />And then Congress got in on the action with TARP.Jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-70418293153013153902016-04-04T04:54:50.224-04:002016-04-04T04:54:50.224-04:00Jim,
The FDIC did, in fact, extend insurance prote...Jim,<br />The FDIC did, in fact, extend insurance protection to Money Market funds from 2008-2009. There was growing concern that if some funds "broke the buck", it would lead to a run on the funds. That's the only point I was trying to make. While this may not be a technical bail out, it did have the effect of stabilizing these institutions.nanutehttps://www.blogger.com/profile/04526158764171117978noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-12633137439366368472016-04-03T19:44:29.901-04:002016-04-03T19:44:29.901-04:00Art. if you want to debase the meaning of of the w...Art. if you want to debase the meaning of of the word "bank" to include just about any financial institution go ahead. Everybody else does it nowadays.<br />Hedge funds can be called banks in the sense that people give them money and they invest it. <br /><br />But the words "depository institutions" have special meaning in the statutes and before the 2008 debacle the title of the graph was accurate after the 2008 debacle the title on the graph is false. That was the only point I was trying to make. <br /><br /><br />Nanute, as far as I have seen the FDIC bailed out nobody. They shut down the deposit institutions that had capital shortfalls.jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-54224979489708801802016-04-03T11:44:18.534-04:002016-04-03T11:44:18.534-04:00Jim,
Are you saying it wasn't a good idea, or...Jim, <br />Are you saying it wasn't a good idea, or is it just a matter of clarification? And with respect to money market accounts, didn't the fed extend FDIC protection to the MM's during the crisis? Art, your point is a good one. (relying less and less on the Fed...) It's also a matter of the removal of barriers on lending by commercial banks with depositors' funds. nanutehttps://www.blogger.com/profile/04526158764171117978noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-56659712748396618872016-04-03T11:22:57.953-04:002016-04-03T11:22:57.953-04:00Jim: "The spike reflects the bailout of the M...Jim: "The spike reflects the bailout of the Money Market Funds, commercial paper, and asset backed securities that were the money of account in the shadow banking system."<br /><br />Okay, but I want to suggest that "the Money Market Funds, commercial paper, and asset backed securities that were the money of account in the shadow banking system" are an example of banks (including shadow banks) relying less and less on the Fed while lending more and more.<br /><br />I think my third graph shows the decline of Federal Reserve power over decades due to financial innovation. And I think your remarks offer evidence of it.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-81788984681575388512016-04-03T08:39:59.400-04:002016-04-03T08:39:59.400-04:00It is truly unfortunate that the Fed continues to ...It is truly unfortunate that the Fed continues to call that "total borrowings of depository institutions" after the 2008 debacle. <br /><br />The big spike that started in 9/2008 was loans to bail out the shadow banking system. In other words, that spike was to bailout everybody but the traditional deposit backed banking. <br /><br />The spike reflects the bailout of the Money Market Funds, commercial paper, and asset backed securities that were the money of account in the shadow banking system. There was a run on the shadow banking system and it took huge sums of money from both the Fed and the US Treasury to contain the run.<br /><br />jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-35751665033612688982016-04-02T07:06:03.885-04:002016-04-02T07:06:03.885-04:00Art, That looks like a good example of when money ...Art, That looks like a good example of when money is "tight." nanutehttps://www.blogger.com/profile/04526158764171117978noreply@blogger.com