tag:blogger.com,1999:blog-648884752216444797.post4579533582298643249..comments2024-03-28T09:59:13.754-07:00Comments on bionic mosquito: The Fed's Non-plan Planbionic mosquitohttp://www.blogger.com/profile/12002548958078731031noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-648884752216444797.post-61851998179844309282013-12-21T08:58:43.855-08:002013-12-21T08:58:43.855-08:00Well stated, bionic mosquito.
Here is a thing th...Well stated, bionic mosquito. <br /><br />Here is a thing that I ponder about the mountain of excess reserves being nudged into becoming bank loans. In a rising interest rate environment, who will want to hold those loans? The banks are too smart to want to trash their balance sheets again by holding depreciating assets, such as fixed interest rate loans in a rising interest rate environment. <br /><br />The banks will either need a patsy to sell their loans to (think Fannie Mae with mortgages), or they will need a way to hedge against the seemingly inevitable losses that holding depreciating loans will cause.<br /><br />I don’t know the answer, just the questions. Who will they sucker into holding the loans, or how will they hedge them?<br /><br />In fact this basic problem (plus the interest paid on excess reserves), can be seen as a contributing factor to the currently unprecedented amount of excess reserves. <br /><br />Regards,<br />gpond gpondhttps://www.blogger.com/profile/01013837189187920036noreply@blogger.com