Investing General Discussion

Sanrith Descartes

Sanrith Descartes

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When the Nasdaq is sitting at 0.00 and you think...

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Mist

Mist

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Tmac said:
"Building reserves for bad loans"

Uhhhhhhh, what?
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To prevent a systemic mortgage collapse. Unthinkable, I know.

Forcing banks to build reserves also throttles the issuance of debt, and since the issuance of debt adds money to the money supply, this therefore throttles the addition of money to the money supply.
 
Sanrith Descartes

Sanrith Descartes

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Mist said:
To prevent a systemic mortgage collapse. Unthinkable, I know.

Forcing banks to build reserves also throttles the issuance of debt, and since the issuance of debt adds money to the money supply, this therefore throttles the addition of money to the money supply.
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Its almost as if the Fed is using banks to help cut inflation by forcing them to raise reserves.
 
Mist

Mist

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Sanrith Descartes said:
Its almost as if the Fed is using banks to help cut inflation by forcing them to raise reserves.
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And it will cool home prices by lowering access to easy mortgages.

But it'll almost certainly continue to drive up rents, so that's not really a win.
 
Tmac

Tmac

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Mist said:
And it will cool home prices by lowering access to easy mortgages.

But it'll almost certainly continue to drive up rents, so that's not really a win.
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I don't see how this particular bit has anything to do with "access to easy mortgages". It forecasts mortgage defaults, homes being repossessed, and added back to "home for sale" inventory. Either way, the market will continue to cool.
 
Mist

Mist

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Tmac said:
I don't see how this particular bit has anything to do with "access to easy mortgages".
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If banks have to hold more reserves, they can issue less mortgages. This lowers the supply of mortgages, meaning the price of mortgages (aka interest rates) will rise.
 
Tmac

Tmac

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Mist said:
If banks have to hold more reserves, they can issue less mortgages. This lowers the supply of mortgages, meaning the price of mortgages (aka interest rates) will rise.
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Okay, that makes sense. That's even more good news for buyers. :)
 
Kiroy

Kiroy

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Burnem Wizfyre said:
I’ll pay 7% interest if the house range I’m looking for currently is 400k drops to 200k and have 75k cash down payment minus closing cost so probably around 65k.

Crash already!
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that 400k will be 600k but be worth 200k
 
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