A big chunk of the money they are making may be coming from here: http://research.stlouisfed.org/fred2/series/BOGNONBR?cid=123
Fed started to pay interest on bank reserves, required or non-borrowed: http://www.federalreserve.gov/monetarypolicy/20081006a.htm http://www.govtrack.us/congress/bill.xpd?bill=s109-2856 I don't know what the current interest rate Fed pays for these, but if it is above the effective fed funds rate, which is about 0.12% in these days, the so-called banks (including JP Morgan and Goldman since they banks now) can make a lot of money out of this, because they can borrow at the feective fed funds rate from others. If the interest rate on the non-borrowed reserves is above 0.12%, then this is outright arbitrage: that is, creating riskless profits with no initial investment. There most be an explanation why there are about $600 billion in the non-borrowed reserves! Any leads would be appreciated. Does anyone know what is the current interest rate on the Best, Sabri _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
