Banks Don’t Want to Be Paid Back Yet
Also bridge loans, unwoke ETFs and a Tesla Bitcoin theory.
Programming note: Money Stuff will be off tomorrow, back on Monday.
Very broadly speaking, a big problem that banks have right now is too much money. The simple way a bank works is that it takes in money from deposits and lends it out as loans, getting more interest on the loans than it pays on the deposits. In 2021, people have a lot of cash, for reasons having to do with economic growth and stimulus and monetary policy and the Fed’s balance sheet and so forth. When people have a lot of cash, they store it in banks, so there is a lot of demand for bank deposits. But when people have a lot of cash, they do not need to borrow more, so there is not a lot of demand for bank loans. The money comes in, but the banks have nowhere to put it.