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First, the deposit side. The Fed manages the "reserves" since the total was usually in surplus, but this arranged stability to carry the times when they weren't, and still kept the volume manageable. When one account is in deficit, the other is in surplus. Computers and wireless transmission caused the cost difference between large and small to decline steadily, so the smaller banks wanted small deposits but don't decide. The credit cards and other non-bank sources followed. Crooks used them to hide their money laundering. The sanctions on Iran were hidden this way, and sanctions were evaded. Cheap pocket computers quickly put a branch bank in every pocket. Migrants could send remittances over borders to the folks back home as direct (non-Fed) deposits. No need to build expensive branch banks. American banks thought it was time to merge; it wasn,t enough. In five or six years, the big Chinese banks courted smaller foreign ones, too, and soon owned half of the deposits, and people were asking who needs banks for investment banking, the really profitable sort of loans. All of a sudden, American banks were threatened and started to merge. Something had to be done, and quickly. Wall Street became focused on the subprime crisis, and politics were allowed to slow the American response.The pandemic of 2020 provided the necessary American time to accept aggregated small deposits; let's hope they rise to the national need. The Orientals have moved so quickly that some compromises will now be necessary, and some crow will have to be eaten. The Constitution unwisely provides for two parties to share responsibility, but does not provide for the possibility of a
If nothing better is suggested, how about also adding a short clause stating "if the President and Congress cannot agree on a budget within x days, the President's budget will temporarily prevail until the Supreme Court rules."
Originally published: Monday, May 18, 2020; most-recently modified: Monday, May 25, 2020