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To: Elroy Jetson who wrote (22564)2/1/2005 9:49:37 AM
From: Knighty Tin  Read Replies (4) | Respond to of 116555
 
Elroy, The Tips Auction question is a good one. True, the rate will keep pace with reported inflation, but so should T-Bill rates.

The other question I have is why ING Bank would pay more on deposits than what they would pay to borrow from Fed Funds? The answer is, I believe, a loss leader that provides them with access to a potential pigeon, er, customer and his other long term financial needs.



To: Elroy Jetson who wrote (22564)2/3/2005 12:13:26 AM
From: J_Locke  Read Replies (1) | Respond to of 116555
 
Rates at the big banks are a joke. They're borrowing at a 60-100 bp discount to Treasuries. They might as well hang a sign on the door that says "We Don't Need Your Stinkin' Money!" Instead of raising the fed funds rate the fed should raise the bank reserve rates back to the 1990 levels - 12% for overnight and 3% for time deposits. The rates are currently 10 and 0 (which is actually higher than they are in "sound money" Europe.)


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