How the banks make the big bucks
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- čas přidán 26. 01. 2010
- We keep hearing that the banks aren't lending. The truth is they are lending and making a lot of money doing it, thanks in large part to one very special borrower. Paddy Hirsch explains. #MarketplaceAPM #EconomicExplainers
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The failure of banks in addition to global economic crisis has left the markets in shreds. I'm at crossroads deciding whether to hold on cash or put money in the stock market, and it's uneasy for me to not panic after a recent awful divorce, my goal is to retire with $3m
investments are subjected to risk, I'd suggest a well experience advisor if you choose to invest wisely! sorry to hear about your divorce
True, a lot of folks downplay the role of advisors, until being burnt by their own emotions, no offense intended. I remember amid covid-19 outbreak, I needed a good strategy to rejuvenate my $700k portfolio, thus consulted the service of a true market strategist. As of today, my portfolio has made a significant 240% return on investment.
@@valentinaarrelaro much more info needed please... we sometimes fail to realize how useful an extra source of income can be until crisis
Can't divulge much, I delegate my excesses to someone of great expertise ''Theresa Leigh Detrick'' preferably you can look her up online, her qualifications speak for itself.
I find this insightful, curiously inputted ''Theresa Leigh Detrick'' on the web and surprisingly came across her consulting page, skimmed through her credentials and got to schedule a call session, she appears to be a first rate professional
This is an absolutely outstanding explanation mate
Am i the only one who thinks that the guy is an awesome teacher ? It can be explained better even a five years old kid can grasp easily. Great job :)
What a lovely example you drew of a banker family. This is probably how all bankers were raised. Taught to shaft their 'loved ones' first!
Blessed is he who lends without interests
Well I'm certainly glad to have stumbled along these videos.
Simple, concise, but very deep! You are an exceptional teacher of finance!
thanks you! my business school never taught me this in 4 years
Wow guys remember work SMARTER not HARDER that’s the lesson here. Open your eyes
LOL! I totally called that Ben Bernanke move. I was thinking the government but close enough.
Why dosnt the US Treasurery go straight to the federal reserve then vs the banks???
It does (technically) but anyone who can afford to, can buy government bonds
because the banks actually has the power, treasury and Fed are just puppets, and the banks want it operate like this
In certain jurisdictions, it is legally impossible for the government to lend money to itself via central bank, under the assumption that doing so would be acting against a free-market economy.
This is no education. This is an add for drinking booze. 😉
No. Great stuff, love it!
lol I'm studying for my CFA, this guy wakes me up from the book reading.
How's life going?
you do excellent illustrations, it makes me understand it much easier.Thanks
THIS VIDEO IS SO AMAZING... It sums up simply what it takes people years and whole books to learn...
I appreciate the effort you made in making this clear to me ... thank you!
Best explanation ever ! thanks a lot !!
loving these videos
lmao does he say say "needing a drink" at the end of each video. This is the 2nd I've watched and this guy is awesome.
thank you sir you made it easier
Many thanks for these videos.
I love the Bernanke drawing, these videos are great.
your videos are superb! thank you!!
Laughed when Helicopter Ben came in the picture haha :D
Even in the worst of times, banks likely continue to make loans to each other. One of the problems that occurred during the financial crisis was that bank confidence plummeted and the industry froze when banks stopped lending even to each other.
fun and educative. best of both worlds. I love it
Thanks Paddy!
Very insightful
Great videos. Subscribed.
this dude is the shit, he should be the head of the fed. im getting my finance degree in youtube video watching.... oh boy i need a drink
This guy is a very good teacher. I'm pretty much a visual learner.
I see the BANKS are doing a good job making money for themselves, Why lend to the public if you can make money like this. Also why we're they bailed out?
Credit Unions,and Small Banks not in financial trouble are the favorite choice today.
Great video!!!
Great video thank u :)
you forgot to mention the part about the public getting stuck with the debt borrowed by the treasury. 18 trillion and growing!
Where do you buy treasurey bonds, I can only find NS and I, which gives you 1 percentage
i lovd your videos
@millball because that would ask why the Treasury isn't printing the money but instead borrowing it from a privately owned entity, and the banks would also have to deal with their own mess of overleveraging, which would/could make some of them go out of business.
Nice explanation
Which system is it wherein banks invest your the cspital you provide for savings CDs etc they make a large gsin but they give you 1 or 2 % return and keep remaining 7 or 8% for themselves?
very clever video
So technically my saving is helping the banks to make more money without even getting nothing. 😂😂😂
The banks aren't buying the bonds using deposited funds in this example. They are buying the bonds using funds received from the Federal Reserve. But you are right that the banks use your money. As soon as you deposit it though, it becomes their money, and the bank can use it however it wants as long as it follows regulations. In return for your money, the bank records a liability to you (because you gave them money) and increases the balance in your bank account.
Well explained
Why not straight from the FED to the Treasury?
imaging that you is Fed, would you give me your money? i promise i will bring them back)
Good question. And you can't just get money for free from the FED, could you? Why would the FED do that?
Maybe the FED owns banks too and that's why they give money for free
No, Leo. The Fed owns a printing press. Congress has allowed them to use that printing press to _legally_ print money. They're the only one with that right in the USA. If _you_ try to do that, they will call you a forgerer and put you in a federal prison. (Fun fact, in Scotland they also have promissory notes issued by private banks that _aren't_ legal tender, yet they are still accepted by most stores as any other pound note.)
@@leobhebhe2793 Giving money for free (near zero interest rates) with an economy who's starting to slow down can bring inflation, so you start to regulate the amount of money that's being pumped into the system by rising rates. "Free money" was a stimulus to the US economy back then, but now it's nearing the end of an expansionary cycle.
Exactly!
We are slowly being bleed to death. Wealthy people have declared war on poor people and poor people as usual are at war with each other.
Moral become rich fast.
It going to get really bad at the bottom.
I think we can learn from CZcams if we choose the right staff.
@millball the fed can loan money to other BANKS, which the treasury is not; hence the term interbank loans. What can happen though is that the fed decides to buy t-notes, bonds, assets, etc through quantitative easing which they have done 3 times in the past few years.
Add to that the fractional reserve banking and it'll be astronomical cash.
Hi! Your vids are awesome! :)
@MrBipBipp makes sense, thanks for the clarification
And all the interest paid from the government to the banks is actually taxpayers money or new money (which creates inflation sooner or later affecting the taxpayers as well). So in the end the whole population is feeding the banks with huge profits while they suffer diminishing purchasing power and liberties.
You can call it theft or counterfeiting.
Hi Paddy
Thank you for your great videos. I do have some questions, to see by which step the banks and the fed earn currency.
Do the bank keep some of the government bonds? Or do they always sell all of them to the Fed?
If the bank keep the government bonds they recieve interest, which the government garantees with taxes, so why do the banks sell the government bonds? Is it to be able to cover the monetary base?
Do the banks receive a fee from the government or the Fed selling the bonds? How is that fee calculated?
Or do the Fed ask a fee/discount from the banks by buying the government bonds?
Is the Fed receiving interest on the government bonds and are they allowed to keep and spend it?
Does the Fed gets a discount when it gives Federal Reserve Cheques to the banks?
Do the bank storage Federal Reserve Cheques, or do they always recieve the sum in Federal Reserve Notes?
What is the exact difference between a Federal Reserve Note and a Federal Reserve Cheque?
The banks generally sell these bonds to the fed along with other securities for their reserve. This increases the bank's reserve to cover deposits and allow further loans to be created. However the banks do not lend their reserves, it allows them to create more loans which in turn increases their liabilities.
Please do a video on rehypothecation and prop trading.
Perfecttly explained for what is happening now
@millball the answer is on page 149 of the book "What Went Wrong with Economics" (search on amazon).
So what does the treasury do?
And, why can't they just get money directly from the feds?
HELP!!!
LOL @ The drawing of Ben Bernanke.
Loved it!!! Esp. free money from daddy/Fed, lending risk free to mommy/Treasury haha!! Loved it !!! So simple, and profound. Thanks a zillion!!
5:20 when you start laughing and crying at the same time
Haha Mr. Hirsch is quite a character and a bad ass teacher to boot. More vids!!!
@millball because it would have to have the money to buy. which it doesnt. all money in circulation comes from a loan. you cannot buy from someone with money you have been loaned from them in the first place.
Bonds that are issue by the government are considered risk free because the government could always tax ppl or print more money if it needs to give money back to the investor
Thank you for these great tutorials. Just a bit confused how the fed makes money if they loan banks at 0% interest rate?
Feds make money by injecting money in to economy and people pay taxes ( all kind of taxes )
Fractional Reserve banking...The same money is lent many times over.....Sleight of hand.
End The Fed Act
Well I'm a believer in real assets in general not just precious metals. I think stocks, bonds, realty even collectibles are just as good for storing wealth. As for making it, be in whatever market is moving.
Are banks claiming to be the beneficiary of the estate(s) - original issue?
Why doesn't the fed give direct to the treasury and cut the banks out. Doesn't make sense!
HAHA, Well in order to answer that question you have to find out who OWNS the FEDERAL reserve :) Just take 60 seconds out of your day and find out.
The Fed. Is NOT a gov. Bank, it is neither owned nor being run by the gov. it is a private bank owned by Rockefellers, Rothchieldss, and very few others. Look it up!
Every dolkar printed by z Fed is a debt from the US gov to those families.
Who owns the FED:
www.laleva.cc/economy/whocontrolsthefrs.html
Banks borrow from themselves, aka the fed :\
The bankers of course love this system. Who wouldn't love free money? But it is not the banks that are at fault. If the Fed gave 'you' free money, would you then be at fault?
The problem is with the concept of the Fed itself, the idea that a central bank can simply invent money out of thin air (literally) and give it to whomever it wants, and the people and Gov aren't even allowed to know to whom it gives the free money!
Support bill HR 1207: Audit The Federal Reserve
Loan Sharking is illegal tho... Because all that profit you make isn't taxed. So the country will think you tax evasion.
i bet if the camera scrolls down, he's standing in a pile of pens
It has, they are called Credit Unions.
บทสวดมนต์
How about fractional reserve lending system? Surely, allowing banks to lend MORE than they actually have is a bigger problem?
I didn't know that people borrow money from the bank just to lend it to other people? I thought people borrow to either fund their business or buy a house? Can someone please explain?
I'm livid!!! HOW?!?! UGHHHHH.
#CFI #CFA ... prepatory projections
In other words it is:
ONE BIG SCAM.
Which is true. 1) money is deposited and banks make loans from that deposited OR
2) Banks make loans and then deposits are made
+se7ensnakes The answer is b) They lend first and seeks reserves second.
The treasury also doesn't NEED money. This guy is an idiot.
If you think housing subprime is ominous, you ought to check out the Fast Food Subprime Mortgage. That's right! McDonald's, Burger King's, Chick-fil-A, etc. etc.. Many are financed by the U.S. Taxpayer through Government Guaranteed financial institutes called CDFI or Community Development Financial Institute banks to minority recipients that do not have enough money or credit to qualify. It's Washington picking winners and losers, and your no winner. It's in the TRILLIONS! Shadowed into the OTC Derivatives market.
Great work! - From Toronto, Ontario, Canada! - If these were on a DVD series with CZcams I'd purchase!! - I wish you were my professor/teacher!!
So why doesn't the treasury borrow straight from the fed???
imaging that you is Fed, would you give me your money? i promise i will bring them back)
are you people never borrow money???
Treasory bonds are not 5% when the Fed is lending to banks at 0.25%???
Why the hell does the US Treasury have to borrow money in the first place? Creature from Jekyl Island?
This would be a great strategy except, in real life banks charge higher interest then government bonds pay and banks don't lend money to individuals to buy financial instruments without collateral.
- At the end u meant treasury got a 'borrower' right?
- lol wondering if u can just put the pen under the white board :P
what can they give money to Treasury directly without going through the banks?
Why doesn't the treasury get money directly from the fed at no interest? What is the purpose of having the banks in the middle when relevant to the treasury? I have also heard the treasury buys their bonds from Glodman Sacs(spelling?)
We should take all our money out of these banks on a set date, with a better plan set up in advance.
@stephenddblyth it gets money from taxes, hence why everything is taxed.
so I should just buy bank stocks?
Why doesn't the fed just loan the money directly to the treasury?? arent they both govt agencies...?
no they are not, funny how they call themselves the Federal Reserve.
The Federal reserve is privately owned. Would you like to know who owns it...GOOGLE IT AND BE AMAZED :)
If you really know what you are doing, yes. But stocks can tumble if the markets for the companies that issued the stocks, are in a prolonged recession. Bonds can default if the bond issuer goes bankrupt, and that can easily happen to a government (and will to the US). And collectibles only hold value as long as there are collectors who have spare money to put into their collections. In a major crash, the value of collectibles could evaporate. Gold and silver are for me, safer.
so mommy is a transvestite..........
AHHHH.
No
Chase has grown up to be a gangster.
Please explain, where does the feds get the money to lend to the banks in the first place? Do they just print money like they showed in 'Money Heist' Netflix series? Your input is appreciated...
The banks create the money from nothing. Sounds crazy? Yes it is, but true. Look for videos by Prof Richard Werner. He is credited with creating the term Quantitative Easing. So the banks make money without risk or innovation. How come? Because that's how the global financial system works. It's an elite club but I suspect you're not a member.
Why would the fed want to give free money?
Why doesn't the Treasury not just buy from the Fed?
I love this shit!
and to top it off Chase owns stakes in the Fed AND would be bailed out if it's investments ever failed! YAY!