slv77

Inflation rate targets can’t be higher than the storage cost of commodities. If the inflation target starts to exceed those costs people will transfer savings into commodities. As people start to hoard commodities prices begin to rise which drives more inflation and more people to hoard commodities and eventually the economy stops functioning.

At some point it makes more sense for commodity producers to leave the oil or copper in the ground because the commodity in the ground is more valuable than what can be earned digging it up, converting it to cash and the losses of holding the cash relative to inflation and taxes.

When things reach that point nations typically have enforced capital controls, fixed exchange rates, and then will nationalize commodity producers and will attempt to implement some form of commodity price controls. Production drops to nothing and the end result is usually a concentration of wealth and power in a small percentage of well connected individuals who strip the country of wealth. This leads to entrenched strong men and oligarchs (Russia, Venezula, Zimbabwe).

The best part is that initially the middle class cheers inflation with rising property values and wages. As the inevitable enshittification and looting of the economy ensues it isn’t obvious that a choice was made and who is to blame. The misery is blamed on foreign powers, the political opposition, and the poor while power and wealth end up in the hands of a few.

I’m suggesting that making loans to people who can’t reasonably be expected to pay shouldn’t be the business of banks. Banks making loans to people who can’t pay is just charity with extra steps.

Making loans to people who are reasonably likely to pay the loan back used to be the primary business of banks. I guess you are correct and I don’t understand why banks are now in the business of making loans to people who can’t pay.

So you are suggesting that lending money to someone where prospective income is unlikely to cover principal and interest is not stupid because the creditors (who may be banks) have been able to structure the system that they won’t ever face the consequences of their decisions?

Loaning $160K to someone who was unlikely to be able to pay that back was also a stupid mistake, no? Given that the debt is non-dischargeable not everyone is allowed to fail.

The bad actors do buy SIM cards in large quantities and there are services that will rent out the numbers for SMS verification. It substantially raises the cost for someone that wants to register 100,000 fraudulent accounts without linking accounts based on phone numbers.

Malicious bots have gotten sophisticated enough that SMS verification and velocity controls are one of the few ways to manage Sybil attacks. Device and IP based systems can’t cope with the onslaught.

In the case of religious organizations a lot of their assets weren’t purchased primarily as investments. Most religious organizations largest assets are in real estate sitting under their churches. The real estate may have appreciated over 100 years but taxing a church on “gains” when the building needs to be moved to make way for an office building isn’t generally what people think of as investment gains.

The same can be said for most charitable organizations. The community food pantry being taxed if it moves across town or simply trying to keep the rainy day fund even with inflation.

If a person is of the view that all good things come from the government then taxing charities makes a lot of sense. If, on the other hand a person believes that all good things originate from the people and that the government is just one of those good things it makes sense to allow room for other things that serve the people’s interests but don’t directly serve the governments interests.

I am certainly not saying that bad things don’t come from religious organizations, charities or the government. I am saying there is a belief in the US that power ultimately resides with the people. Actually with the people, not the government or through the government as representatives of the people.

There are two main tax exemptions which churches benefit from in the US. The first is that donation are tax deductible for taxpayers that itemize their deductions. The second is that any income from investments is also tax free. This is the case for any 503b non-profit organization in the US, not strictly for churches. For example, if you local youth soccer program was a 503b the interest from their bank account isn’t taxed.

If a 503B puts its money into Microsoft stock, the profits that Microsoft makes are taxed. The capital gains the 503B gets wouldn’t get taxed when the stock was sold.

The main argument in the article, not fully stated, is that the Mormon Church doesn’t do enough beneficial works to qualify as a 503b. In the US, Churches are granted 503b status without specific reviews of their societal benefit. If you want to pay someone to operate a homeless shelter or ding a bell all day to prevent the end of times, it is all the same. This is part of separation of church and state as laid out in the constitution. If there was a specific review the State could “put its thumb” on the scales and favor some churches over others in granting non-profit status.

Churches, just like the local soccer club don’t have the same distribution requirements that a donor controlled 503b would have. For example if you are a billionaire and donate $1B of your appreciated stock to your donor directed fund you need to distribute 5% per year on charitable works to keep the 503b status. The article implies that the same requirement should apply to the Mormon Church that applies to a donor directed fund. This line of reasoning is incorrect.

A donor directed fund has substantially no other affiliated activity that has to be considered. This is more like Harvard’s endowment where there is a school controls the fund. In the case of Harvard, if the fund didn’t distribute anything in a year there still would be substantial educational work and research going on. In the case of a donor directed non-profit nothing would be happening. The Mormon Church argues that it operates more like Harvard and that the whistleblower did not have access to the larger organizations finances.

All global churches right now are facing a demographic cliff as wealthy nations are increasingly secular while most religions growth is in developing countries. In most cases Churches transfer a large amount of donations from wealthy countries like the US to less wealthy ones like Nigeria. In another 50 years many of those transfers will cease to be significant unless there is a religious revival in wealthier markets or a significant deviation in the number of children religious families have relative to the overall population in these countries. It is likely that many churches will need to wind down financial activities to be more aligned with the demographics.

They have a large number of volunteers either proselytizing or serving in various countries. Security help ensure that the areas they serve in are reasonably safe. For example, moving out people in advance of the war in Ukraine [1]. These are similar to the teams or consultants that travel manage risks for large, global conglomerates.

In addition any high profile event or personality is a potential target and requires people who can help manage the risks.

1 -https://newsroom.churchofjesuschrist.org/article/missionarie...

High interest rates incentivize people to save now to spend more in the future and low interest rates incentivize people to spend now and spend less in the future. Young people tend to be in the spend now camp as they purchase homes, cars and other big ticket items that they will pay with based on increasing incomes. Older people tend to save now so they can purchase what they need in the future when they have declining incomes. The ratio of young to old influence interest rate demand.

High interest rates incentivize people to save now to spend more in the future and low interest rates incentivize people to spend now and spend less in the future.

Young people tend to be in the spend now camp as they purchase homes, cars and other big ticket items that they will pay with based on increasing incomes. Older people tend to save now so they can purchase what they need in the future when they have declining incomes.

The ratio of going to old influence interest rate demand.

Rents and speculation or any activity that allows someone to siphon off the productive gains of society that they had no hand in producing.

For example, a company in nowhere-ville develops Mr. Fusion (home edition) and needs to expand rapidly. Rents and land prices double overnight which results in the cost of labor rising which slows expansion.

There are many opportunities for rent extraction in capitalistic systems and some degree of rent and speculation are necessary to establish a market but when society allows for excessive rent taking and speculation it becomes dead weight on productive investment.

For example the “billion dollar industry” for sand that makes computer chips (https://www.wired.com/story/book-excerpt-science-of-ultra-pu...) is an example of companies with little or no investment in the technology around chips who were able to extract large sums of money simply by controlling a sand pile.

It can also cause cataracts (https://news.fordham.edu/science/st-johns-wort-and-sun-dont-...)

A lot of the fraud originated overseas with some of it from state sponsored groups. Prosecution is essentially impossible.

There is a difference between monetary policy and fiscal policy. Monetary policy is set by the Federal Reserve while fiscal policy is set by Congress (as laid out in the constitution) The activist Fed under “the courage to act” Bernanke and more recently under Powell moved from the realm of monetary policy to fiscal policy.

By massively expanding the Feds balance sheet with mortgage bonds the Federal Reserve massively increased the value of housing and lowered mortgage payments for existing homeowners. Prior to 2008 the Fed only bought US government securities so any market distortions it caused the benefit accrued to the Government.

As the Fed is now having to pay interest on reserves and higher inflation it is making the cost of those decisions more apparent.

Now, if Congress had said in 2008 that they wanted to write checks for a a couple of trillion dollars per year to homeowners and pay for it with a 10% tax (inflation) that would mostly benefit the old and wealthy and hit the young and poor the hardest they would be within their constitutional power to do so. It is unlikely that Congress would ever do so but the Federal Reserve made that decision. That makes me uncomfortable.

Operating losses means that the Federal Reserve is paying out interest to banks in excess of the amount that it is earning in interest. Historically that wasn’t possible because the Federal Reserve didn’t pay interest on reserves. It has to do so now because its balance sheet is so large due to QE that it can’t influence rates by shrinking its balance sheet.

This is significant because the losses are born by the taxpayer which violates the constitutional mandate that all spending is approved by the house. The Fed is sidestepping this by booking the operating losses in an accrual account to be booked against future interest earned.

Western Union got fined a half a billion dollars because it helped facilitate fraud:

https://www.justice.gov/opa/pr/western-union-admits-anti-mon...

Nobody profits when a bad loan is made. Money that represents a promise of future spending made to someone who saved instead spent is destroyed. The only question is who is going to pay the cost.

In 2008 the wizzes of the banking industry had made billions of bad loans. Who paid for it? Anybody who saved instead of spent and invested instead of speculated. In other words, almost all of us did. Once all the pluses and minuses are canceled out we’re all poorer for it. Saying anything else is putting lipstick on a pig.

Traditionally banks which needed cash to balance their books worked through the interbank market. Interbank lending was unsecured but short term so the risks were manageable. If a bank was known to be insolvent however lending would quickly dry up and banks would need to go hat-in-hand to the Federal Reserves discount window. That came with a high cost and invited regulatory scrutiny.

Now the FDIC has indicated that it will insure deposits in unlimited amounts doing a direct deposit maybe a more attractive option to banks? That $30B previously was sitting around at the Fed earning a risk free return at prevailing interest rates. I have to assume that there is special treatment here and the banks are earning above market returns and the banks didn’t put cash-at-risk sitting in zero interest accounts out of the goodness of their hearts.

If that is the case the Fed, FDIC and Yellen have effectively nerfed the interbank market.

Pricing is the primary economic signal that guides investment in a capitalist system. When inflation runs too high the pricing signals break down as the result of speculation and hoarding. That can lead to malinvestment.

Historically the Fed’s job was to “take away the punch bowl” and wring the bad debt and malinvestment out of the system before it became a systemic risk. Since 2008 the system has primarily focused on how to move the bad debt around to avoid default.

There is no need as they can just park the excess reserves with the Fed and earn a risk free rate with no duration risk.

Unless the US is willing to redistribute wealth from capital to labor, from the old to the young and rich to the poor it will be difficult for the Fed to sustain high rates of inflation. Rich people can only buy so many cars and the old eventually start preferring security (savings) over consumption.

The massive stimulus combined with the rising millennial generation is driving inflation along with supply chain challenges, breakdown of globalization and a massive increase in the Feds balance sheet. The question isn’t why there is inflation but the question is why is there so little?

The Federal Reserve can but only by increasing reserves. This exposes the Fed by risk if the bank is shuttered. In that case the Fed is stuck with bonds paying 2.0% while it is paying more on reserves and ends up losing money every month. Today the Fed is paying out more interest than it is earning with an estimated $80B loss for 2023. These losses are creatively booked as deferred assets.

The Fed can also take losses if the bank fails and the assets don’t pay back at par value. Mortgage holders walk away from their homes as prices fall.

And since it is the Federal Reserve it is taking all of these risks on the US taxpayers behalf.

It also works against the Federal Reserves stated policy of shrinking their balance sheet due to inflation.

These types of solutions were usually targeted at enterprise customers who had heavy random read and write workloads that needed to be non-volatile. The disks usually had a battery with enough life to dump the data to persistent storage in the case of a reboot or power outage. For example if you had need to continuously update a bloom filter for some reason.

They have been mostly displaced by enterprise SSD based drives that have high IOPs or big data solutions with transaction logs and distributed reads and writes.

No private institutions with hard cash are going to be willing to take the portfolio because of the opportunity cost of investing that money at higher rates of returns. Any institutions that would need to borrow to buy the portfolio would need to borrow at higher interest rates and earn lower rates generating a loss each month. There is now way to take the portfolio without a discount and not have a loss.

If there was a way out of this without a loss the bank wouldn’t be insolvent (bankrupt).

Juice companies extract the volatile components and them send them to perfumers who transform them into a specific flavor profile which is then added back to the juice. The flavor packs are derived from oranges so they don’t need to be labeled as an ingredient but provide a consistent experience.

Except that before the “I’ve Never Seen A Bubble” Federal Reserve and “Everything’s AAA” Credit Agencies got involved those prices were closer to $60/sq foot. The massive amount of QE since 2008 and 2020 has sloshed into the housing market.

The saying used to me that “all real estate is local” meaning that economic trends didn’t dominate local economic trends. Today it’s completely dominated by the Fed.

https://fred.stlouisfed.org/series/IASTHPI

Given the IRSF attacks that I’ve seen the number isn’t out-of-line with reality. Many of the attacks originate from countries that are perennially short hard currency and with sanctions and rising interest rates dollars are hard to come by. As a head of a telco that needs hard cash to pay for equipment that is all imported, how closely are you going to look?

Tying shoelaces in a granny knot instead of a square knot. In a granny knot the shoe laces sit crooked and easily come undone.

https://www.fieggen.com/shoelace/grannyknot.htm