Bank Failures Come in Waves

Re:Bank Failures Come in Waves by yalogin on Tuesday March 21, 2023 @11:35AM (#35247702)

When fed started raising interest rates to curb inflation, the prevalent wisdom was that the average consumer has too much money because of low rates and is spending way too much. The thought was raising rates would curb their spending and bring prices down slowly. However, it turns out the average consumer is very principled with money and is handling it very well. The rich/corporations like banks, VCs, companies felt super rich with the raising stock and began taking on abnormal risk. This was not expected by many. It may eventually lead to the average consumer getting hurt as a repercussion of the failure at the top though. Of course even the crisis of 2008 was caused by exuberant bankers. You need to have access to lots of money to cause lots of damage.

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Re:Bank Failures Come in Waves by mhh__ on Tuesday March 21, 2023 @11:42AM (#35247810)

It requires great political training to believe the best person to spend your money isn't you — e.g. some people believe the poor can't be trusted with money, and so on (socialism etc)

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Re:Bank Failures Come in Waves by gongle on Tuesday March 21, 2023 @12:31PM (#35248577)

corporations cant be trusted to spend the peoples money.

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Re:Bank Failures Come in Waves by endtime on Tuesday March 21, 2023 @11:44AM (#35247842)

> the prevalent wisdom was that the average consumer has too much money because of low rates

I'm sure it was all the low rates, and not at all due to printing 40% of the money supply in two years and mailing people checks.

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Re:Bank Failures Come in Waves by sethd on Tuesday March 21, 2023 @11:52AM (#35247956)

FYI, this part didn't happen:

> printing 40% of the money supply in two years

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Re:Bank Failures Come in Waves by mech987 on Tuesday March 21, 2023 @12:00PM (#35248078)

Here's the data on M2 money supply in billions of dollars, for those curious, in billions of dollars:

Feb 2020: 15,457.9 Feb 2022: 21,699.2

This is a 40.3% increase.

To be charitable, this money isn't all on printed physical cash dollar bills, but nowadays there is no need for it to be. (I'm tempted not to be charitable though.)

https://fred.stlouisfed.org/series/M2SL

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Re:Bank Failures Come in Waves by wwalexander on Tuesday March 21, 2023 @01:53PM (#35249821)

A 40.3% increase is different than the percentage of the total money supply that was printed in the last two years, which for your numbers works out to about 29%. I would argue that most people would interpret “we created X% of the Y supply” in this way and not as a percentage increase.

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Re:Bank Failures Come in Waves by mech987 on Tuesday March 21, 2023 @02:51PM (#35250731)

That is a fair point- although when the increases are large enough in such a small time that the prior/posterior calculations are that different, I don't feel like it inspires confidence.

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Re:Bank Failures Come in Waves by sidewndr46 on Wednesday March 22, 2023 @02:38PM (#35265323)

the point your making is completely useless. If someone has billions of dollars in storage somewhere (like Iran literally does) it doesn't affect the supply of money until they start moving it or using it in some way.

Like if someone found a trillion long tons of pure gold somewhere, but decided not to sell it or even use it. The price of gold isn't just going to collapse overnight. Sure the markets will panic sell for a few days, but it's still a real commodity with real uses & demands.

Putting a ton more _active_ money in the system does change the value of money.

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Re:Bank Failures Come in Waves by wwalexander on Wednesday March 22, 2023 @03:11PM (#35265791)

I’m not making any point at all, besides trying to clarify the math and terminology GP used. I know very little about economics :)

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Re:Bank Failures Come in Waves by keneda7 on Tuesday March 21, 2023 @12:23PM (#35248426)

I see this repeated a lot. Are you trying to be technical and say the money wasn't physically printed? If you are doing that, you are being ridiculous. But if you are not trying to be technical could you please provide some proof? Another responder was nice enough to give you the M2 money supply numbers which 100% support what you are saying didn't happen.

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Re:Bank Failures Come in Waves by sethd on Tuesday March 21, 2023 @08:12PM (#35254768)

Not a technicality, 40% of the money supply was not printed/created in any remotely recent two year period.

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