PE53: What was the Greenspan-Bernanke Put? (VIII)

PE53: What was the Greenspan-Bernanke Put? (VIII)

Time Stamp: April 10, 2023 10:59 AM
Source Node: 2575926

Check out show sponsor Coinkite: https://coinkite.com/

Donations to Porkopolis Economics via BTCPay appreciated: https://donations.porkopolis.io/

This is the fifty-third video installment from Porkopolis Economics, covering macro and money, from the creator of the Crypto Voices podcast.

Contents

00:00 Intro

01:45 Review of all-time high rates

03:03 Once the hard work was done…

05:34 Fed begins new 'Target rate'

10:42 Greenspan put

12:16 The birth of the housing bubble

14:40 Cracks in the system

16:50 Banks expect (demand!) lower base money rates

23:20 Fed funds now has lower and upper bound

Here we look at the Federal Reserve's weekly balance sheet versus its base policy interest rate in the 1980s until the Global Financial Crisis, which at this time morphed from being the Discount Rate, to the Fed Funds Rate.

If we look closely at the troubles of the GFC, we can actually see that the banks expect the Federal Reserve to cater to them, bail them out, and provide lower rates, as they are borrowing and lending around 100 bps below what the Fed was targeting for many weeks from September through December 2008. The Federal Reserve, eventually, indeed complied with this demand.

Home

Show content is not investment or financial advice in any way.

Time Stamp:

More from Crypto Voices