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somebody's going up a lot with help us a wake up
is our next guest
all abrams team
is the co-founder
or break up the big banks dot com website i can get behind
all of the other
thank you very much
like to hear i've graded so i was
as it was something you wrote was it is very important sing which is
the concept that we are giving tax payer money basically through the fed
at a lower rate and then the banks or loading it back to us at a higher rate
so i need anne that x explained a little bit better still set up process for
there well actually i a different protector but it was just like the
statement
basically the fed
prints money dado term
they don't actually uh... take taxes than
but what they're doing is true the fed window
and all of this is
terminology jargon so let me make it simple
the federal reserve
one of its functions
is to loan banks money
so that they can engage in their normal activities
both activities are supposed to include providing credit liquidity enabling
company to be payroll when they're
receipt
haven't quite come in yet practical or
it's accurate
and giving loans to construction companies to build new buildings that
and all of that
that's what the banks is supposed to be doing anti federal reserve window with
setup so that the banks could go there and borrow money from the federal
reserve that's what the fed funds rate areas
and right now the fed funds rate it struck between zero and point to five
percent
and just looking it up today if u you were a bank and you what's the window
you could take your money at point two percent
so what since but the bank big banks at least which of the one thing i'm
concentrating on
are really using the money for loans and liquidity that's still an enormous
problem in our economy
what they're doing if they're turning around buying treasury bonds and that is
basically money that t_v_ or or
build that the treasury puts out in order to pay for the debt
and so bowed instruments depending on whether they are three months or six
months for a year
a six-month treasury bill with twenty three percent
and a twelve-month treasury bill s point three six percent
so that's a pretty simple equation you can make point three year point six
stamped on every dollar
at three or six times in every dollar
now that doesn't count like very much so that i wrote if u
if you went to borrow a hundred dollars
animate six-ounce
it wouldn't really be worth the effort
but if you're doing it billions of dollars that way
and thanks to you
you can just take the difference
and income
and then turn around and tell your shareholders hell britney you've been
on managing your
and the other important points about all of them
and this goes to a lot of what they banking activity is about
these days
is that it doesn't create anything
financial manipulation
it doesn't create anew drug
that you treated these
it doesn't create a new bridge in new home
it doesn't provide dictation for somebody's children
all it does is take a difference of what they call them the financial industry
the spread
and uh... take tennis profit and might point
with not that we should abolish the fred said window it performs
should perform a very important function
but that what congress ought to do is monitor the use of that function
so that there's some correlation between what the banks are actually taking from
the fed window
and the amount of loans and credit
and acquitted he that they are providing for the economy
for the people like your listeners or actually making and doing things of some
importance ultimately break that down for people tell me if i'm going to buy
the school so they're accident ed maker bankable or a point two percent for the
fat
how they can then turn around and lend it to you for and a lot of their parade
secret be a morbid fit sixth sense of seventy percent
that would be a gigantic spread point to two seven percent for example okay
or they can give you a credit card
in sometimes it was good at the nineteen percent twenty nine percent
so they're born yet too
and blending it out and point absent but
that that a lot of certain level of risk that's why they're charging those higher
and higher interest rates before pols talking about for the treasury their is
no risk they just borrow at a lower rate
and then they turn into the back of the government at no risk at a higher rate
so they can
whose anything
one glad that right into if that's the case
i mean doesn't business campaigning
why don't we get to do that or papers why you are interested in america get to
do it
will actually at one point that is making that be citizens of the country
ought to form
into the back of the american people
and just go to the fed window
and borrow money
and we'd all be wretch weeks
it's it's a rotten
efforts to paint us i mean i don't
is crazy so now is going to get it will be provided to normal banking activities
and i should say that even in normal times
thanks did parked their money into treasury bills but
in this time
when they're borrowing enormous amounts of money from the fed
and when they are not actually doing what park with supposed to make them do
and what this
lending facility is supposed to be there for
i think that it's time you don't want to have time
up for the congress ought to do something about that wipeout one last
question for you and it's on that backed out
do we have any bill or amendment or anything along those lines that would
of control the the variability here between the fed with no
and and
the treading water activity but not the title of the only thing that is going on
the is that the fed is going to be all about it
and i don't know enough about the technicalities of the bill
two nos it that sort of activity is going to be part of that all of it or
not
and uh... you know if i have a moment
to go on to any slightly different but also in the famed drain pipe a point
and that is uh... you've already about
goldman sachs and are not the only ones who do it
launching and instrument
you know some kind of uh... of uh... security
that investors by
and then turning around
and going short on that and what that means
for people again who are and actually put into the prenuptial jordan
it that they bet that it's going down
so they jumped hope something to people
who are betting that it's going up
and they are betting that it's going down
and they say oh you know we have to do that in order to
uh... you know equalizer the markets and manage risk quote-unquote by the way
meadow trip
every time you hear that
that's a red flag
because
what it is it's an excuse in jordan
for taking risks with your life and my life
that they that neither you nor i have given them
the permission to take
but so what they do it they they they uh...
that that it's going down that's what
cook on the fact is in trouble for
right now in this one particular deal
well
i tended to you know of a publicly traded company
and one of the things that we did in this probably pretty confident
and almost all of them do it if not all
if they can say that
employees of officer or an executive
cannot go short that is debt against their company stock price
soloing quite fine
who runs goldman sachs
can't go short bet against goldman sachs stock
but he can sell you something
that he'd end up against
and that it's something that i think needs to be stopped as well
and there is legislation
that is pending
or awaited maybe actually in one of the builds there that you were talking about
a moment ago that
may go down because of the republicans
that uh... would in fact put it into something like that
and that is just uh... absolutely
outrageous
right-o pet the dog amendment would prevent naked credit default swap so
then he would than like not to be admitted that that's one thing but the
other side of it is also
hellen abyss a carrot
and then go in short debiting against could basically assuming that that
security could become valueless
and that's what they did with these mortgages before
right and up indiana
began that insecure in her only your comments by the way it just rupnik
when you talk about the conservatives and republicans and what they should
really be four
uh... if they were truly conservative
it seems to me that uh... what they have done
is mixed up in the americans' minds
the difference between free market and later a fair
free-market if they're really going to be markets for choir really good rules
so that everybody
it's playing more left-handed equal playing field
late date they are allowed people to had no rules
and as a consequence those second-quarter various markets quarter
them
neck exactly the opposite
utterly adam that would be rolling in first grade
if he thought that if he saw bill was going on now
being called a
free markets by republicans absolutely all abrams co-founder break up the big
banks dot com thanks so much for joining us really pretty and thank you have
we'll be right back