Rebirth 79: I opened a bank in the United States

Chapter 2 Money Isn't Like That

"Maybe Mr. Black believes that the Ford government can revitalize the economy. In addition, the Federal Reserve will issue a large amount of money. If you don't lend the money out, you will only lose money if you keep it in your hands."

Believing in the Ford government is more like believing in the so-called Great America.Before the 60s, especially from the 20s to the mid-[-]s, the "golden decade" that lasted nearly [-] years was undoubtedly an important time for the American economy to take off.

In the global context of the full recovery of the post-war economy, the sixth son of the United States, who had already eaten up the war dividends through World War II, wanted money, money, and people!Coupled with the so-called "European Recovery Plan", there is no need to worry about dumping the output of various factories.

The American economy has taken off, and Carter's cheap daddy, Old Blake, has also taken off with this east wind that has been blowing for nearly two decades.From a poor boy in an agricultural state, step by step to become bigger and stronger, and create a new era.
It can't be done anymore, the wind has passed, and the old Blake, who was blown dazed by the wind, also stopped.But old Blake has been enjoying himself for twenty years, which is enough.But leave this mess and leave it to yourself, isn't this an inappropriate model of pitfalls? !
If I don't "I will support your wife and children", I feel a little sorry for my brain cells that will die.

"Forget it, don't mention him! Can Portnewt Bank and Monza Bank still get money?"

Carter rubbed his swollen temples and asked haggardly.

The Portnewt Bank and the Bank of Monza are both small banks in nearby cities like their own, and they have borrowed funds from each other in the past.Barely counted as an acquaintance in the industry, since his family didn't have enough money, Carter naturally turned his mind on them.

"Mr. Black asked before that the current situation of the two of them is not particularly good. It is okay to borrow money, but the interest is very high."

"High? How high?"

Carter frowned, looked at the calendar next to the wall again, his eyes became brighter and brighter.

There seems to be a way to break the game!

"The old Porter in Portnewt asks for 12 points of interest, and can lend us 20 US dollars; Monza asks for 11.5, and can borrow 25 US dollars. We might as well borrow from the Federal Reserve for this interest rate, which is simply stealing money !"

Goodman complained angrily about the two colleagues who took advantage of the fire, and criticized them for disregarding their past friendship.Thinking about when the old Blake was around, they were in trouble, how to help them tide over the difficulties
"Wait, wait! Stop the fairy tales of helping each other, what's the Fed funds rate right now?"

As a banker, if your peers are in trouble, why don't you go to merge and develop, and you actually give them low-interest loans to help people tide over the difficulties?
The more he knew about Old Black's past, the more Carter became unable to complain about this cheap old man.Interrupting Goodman's complaints, Carter asked bluntly.

If memory serves me correctly, the federal funds rate will rise to an all-time high in the next few years.It seems to be 20?It's still 21, 22
Carter regretted that he didn't listen carefully in class, but with this information, it was enough!Whether it is 20 or 22, it is much higher than the interest offered by Portnewt or the Bank of Monza.

"The federal funds rate. It is now 10.52%! Carter, are you planning to borrow money from the Federal Reserve? With the size of our bank, I am afraid it will be difficult to borrow much"

[-] percent? !

Carter turned his head a third time, looking at the calendar on the wall.It is now June of 79. If there is no butterfly effect, then two months later, Paul Volcker, the 6th chairman of the Federal Reserve, will take office.

And the serious economic stagflation crisis in the United States this time was also contained in the hands of Volcker.Similarly, the federal funds rate, which hit the highest value in history, was also born in the hands of this boss.

This Volker solution to the crisis is actually very simple and rude.It is desperately raising the federal funds rate, which is undoubtedly an extremely tight monetary policy.

It can be foreseen that with the increase of the federal funds rate, the cost of borrowing by various banks will increase infinitely.It is impossible for all banks to release loans at will as in the past.In the same way, if banks pay high interest when borrowing money, they will naturally charge higher interest when they borrow money.

When the inflation rate was high in the [-]s, most ordinary Americans formed the habit of spending first and repaying later.Because if you save money first and then spend it, you may save money to buy a car one year ago, but you can only buy a motorcycle the next year.And if you take out a loan to buy a car first, then you only need to pay back the money for a motorcycle in the second year!
No one is a fool. Under such a background, who would save money?There is no deposit in the first place, and the threshold for loans is raised, and the interest on loans is increased, forcing people not to borrow money, or unable to borrow money.So how do they spend it?When the monthly salary is received, more than half of the previous loan has to be repaid, but the new loan cannot be obtained, or dare not take the loan
Artificially and forcibly reduce the consumer demand of the public, and slap the amount of money on the market to match the supply.The amount of money has matched the amount of supply, and the inflation has been contained soon?

The logic is such a logic. As for how many banks will close down, how many factories will be closed, and how many more homeless people will be on the streets during this process, Carter does not know, and he has never paid special attention to this area.

But compared to the current high inflation, the next few years will obviously be more difficult.For small banks and small businesses like my own, it is a crisis of life and death.

Crisis crisis, where there is danger, there is opportunity!

If I borrowed heavily at an interest rate of about [-]% before Volcker came to power, and then lent out when the federal funds rate rises, the difference between
What's even more favorable is that there is almost no installment repayment method for loan repayment these days.After the maturity date, the principal and interest will be returned in one lump sum.

In other words, during this period of time, the money is in hand without even paying interest.Borrowing for a period of five years, that is, about [-]% interest.

Borrow [-], and after five years, pay back [-]!When the interest rate of the fund reaches its highest point, if you lend out [-] yuan, you will have to pay back [-] yuan in two years. And this is still a situation where you hold the money in your hands and only lend it out after three years
Anyway, he used to study economics. Although Carter has never worked in a big investment bank like Goldman Sachs, he knows it well.

That's not how it works!That's not how money works!

To operate with foresight is completely a matter of making a profit.The only risk is whether Paul Volcker will become the 79th chairman of the Federal Reserve in August 8 as in history!
Carter asked himself in his heart:

bet? !
(End of this chapter)