You never know. They could be making safe loans to balance it out. But raising rates is supposed to slow borrowing, and the possibility of demand reduction to reduce inflation is supposed to make borrowing more risky. Maybe they already made the risky loans. A lot of long term assets depreciated due to rates tho. So maybe that’s where their heads are at. It’ll all be fine,

But some are paying higher than the rate they get on safe assets including reserves which pay 4.9% (IORB).

Even if it's like credit card debt or safe mortgages or car loans or student loans, the fed's hiking, default risk increases, and that's priced in, but regardless, banks seem to be getting into the weeds a bit.

sure, but in terms of accounting for safe assets, it feels like they need to make riskier loans or buy riskier assets to stay ahead of their rate theyre paying on their deposits.

I had this same thought today.

IORB is less than 5

T-bill and every treasury yield is less than 5.

commercial paper less than 5.

interbank less than 5.

What could any bank issuing a 5% yield on a CD possibly be buying with that money to turn a profit with safe assets? Discount window is 5% and they might as well be just borrowing from the discount window. But of course, they're now able to leverage the face value of T-bonds but those still don't have those 5% yields ultimately.

So banks offering 5% on CDs must be getting some yield on something that is greater. Which seems like they're going to be riskier assets. If a bunch of money is tied up in less liquid assets, the chances of those riskier borrowers paying back those loans (or mortgages) could go down.

After some degrees of separation of asset purchases, it feels like the higher yields coming out of the crypto sector could be the culprit. But that could be this house of cards with all of the unsecured stablecoins. Or something. There definitely feels like something there.

I’m frankly so bullish on Zimbabwe. I’m thinking about buying so much of their cash that the carrying cost is like way higher than the actual value of the cash

They’ve been pretty good about not printing money though. I’m bullish on Zimbabwe. Are there any zimbabwe etfs? Buy the dip.

What about Zimbabwe tho.

Lowering rates after raising them is deflationary. Yield curve flattening after being inverted is a sign of a coming recession.