Tuesday, July 2, 2013

The Nudge That Will Force Banks to Put More Money Into Treasury Securities

The Federal Reserve is out with a release today announcing that it:
 on Tuesday approved a final rule to help ensure banks maintain strong capital positions that will enable them to continue lending to creditworthy households and businesses even after unforeseen losses and during severe economic downturns[...]
"This framework requires banking organizations to hold more and higher quality capital, which acts as a financial cushion to absorb losses, while reducing the incentive for firms to take excessive risks," Chairman Ben Bernanke said. "With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy."
Translation: The rules will require banks to purchase more government securities, rather than make loans to the private sector. The nudge is in.

In a May 1 report,Treasury Borrowing Advisory Committee said  banks, over time, will need to buy as much as $5.7 trillion in "safe" assets including government bonds by 2020 to comply with the
2010 Dodd-Frank Act in the U.S., and capital standards set by the Bank
for International Settlements in Basel, Switzerlandt.

1 comment:

  1. The Federal Reserve’s strong capital positions framework ruling of July 2, 2013, is diktat in its rawest form. The US central bank ruling for capital adequacy consisting of Federal Government Debt, SHY, IEF, TLT, is a form of diktat money, that replaces fiat money. Furthermore, today’s diktat, evidences an integration between banks and government, where community banks will be known as “ Government Banks” or “Gov Banks” for short. An inquiring mind asks, will gold stored in the bank’s vault, constitute “higher quality capital” mentioned in the Federal Reserve Board capital framework rule?

    The Stockcharts.com chart of the US Dollar, $USD, shows a close at 83.76; just above $82.67, its 50 day moving average. The US Dollar is trading in the middle of a broadening top pattern, which is best seen in the Finviz chart of its 200% ETF, UUP; it’s as Street Authority relates, when you see the broadening top the market will eventually drop.

    When the Bretton Woods system, synonymous with the Milton Friedman Free To Choose floating currency system, really gives way, America’s Dollar Empire, that is the US Dollar Hegemonic Empire, and its globe-spanning archipelago of military bases, will collapse, and the Ten Toed Kingdom of Regional Governance of Daniel 2:25-45, will emerge, where ten regional zones of increasing iron diktat will emerge out of today’s clay democracy. The additional bible prophecy of Revelation 13:1-4 presents the ten zones of regional governance, as ten horns on a beast, that also has seven heads, suggesting totalitarian collectivism. The seven heads symbolize mankind’s seven institutions: 1) Education, 2) Banking, Finance, Commerce and Trade, 3) Body Politic, 4) Military, 5) Religion, 6) Media, 7) Science and Technology.

    The jump on the Interest Rate on the US Ten Year Note, ^TNX, to 2.01% on May 24, 2013, constituted an “extinction event”, that is a cataclysm, which literally destroyed the investment choice offered by bankers as the way of life, and terminated the paradigm of Liberalism. Jesus Christ is operating at the helm of the Economy of God, Ephesians 1:10, and has pivoting the world into the paradigm of Authoritarianism, where the diktat of nannycrats is the now the way of life. Fiat money died, and diktat money has been coming to life.

    Please consider the corollaries from the Dispensation Economics Manifest ... http://theyenguy.wordpress.com/about/ ... that flows from the biblical revelation that Jesus Christ, is operating as steward in dispensation, that is the household management plan of God to both complete and fulfill all things in every age, epoch, era and time period.

    Liberalism’s Banker regime (which was based upon democratic nation states) had a policy of investment choice. The dynamo was one monetary interventionism, consisting of POMO, Quantitative Easing, Central Bank Interest Rate Reductions, Kuroda Abenomics, and Global ZIRP, which powered up corporate profit and global growth ... and came with credit schemes, such as free trade agreements, financial deregulation, leveraged buyouts, nation investment, currency carry trade investing, securitization of debt, financialization of stocks and ETFs, and dollarization ... where Milton Friedman’s Free To Choose concept of floating currencies and abandonment of the gold standard, established the rule underlying all investing, providing for the fiat money system.

    Authoritarianism’s Beast regime (is based upon statist regional governance) has a policy of diktat. The dynamo is one totalitarian collectivism consisting of public private partnerships for oversight of the factors of production, banking, commerce and trade, which powers up regional security, stability and sustainability ... and comes with debt servitude schemes, such as regional framework agreements, bank deposits bailins, new taxes, privatizations, capital controls, central bank rulings for capital adequacy consisting of Federal Government debt, and austerity measures ... where nannycrats establish the rule underlying all diktat, providing for the diktat money system.