what are "time deposits?"

[chad]

need help with this article:

http://www.cnbc.com/id/42209447

The United States is on a fiscal path towards insolvency and policymakers are at a "tipping point," a Federal Reserve official said on Tuesday.

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt.

"The short-term negotiations are very important, I look at this as a tipping point."

But he added he was confident in the Americans' ability to take the right decisions and said the country would avoid insolvency.

"I think we are at the beginning of the process and it's going to be very painful," he added.

Fisher earlier said the US economic recovery is gathering momentum, adding that he personally was extremely vigilant on inflation pressures.

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

what is a "time deposit?" never heard of this before. i looked it up on google and it says it's like a cd. how does this work with the government? i don't get it.

[Neuro]

I don't know, but I think it may be a misspelling for a timed deposit. Which I am not entirely sure what that would be either... ;D

[Sparky]

A time deposit is a deposit made with time restrictions on withdrawal, such as a CD.

But I, too, am still trying to figure out the context of this in terms of Fed action...

[Cobalt]

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

It is my understanding that time deposits are like CD's, they are deposited for a certain length of time which would make sense if the Fed is trying to tighten monetary supply like the article said then what better way then getting people to sign up and deposit it for a long time, this would basically remove dollars from circulation.
The Fed still gets to charge interest on that money since it only loaned it to the gubment and because it still exists, the gubment is still on the hook for paying for it.

[chad]

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

It is my understanding that time deposits are like CD's, they are deposited for a certain length of time which would make sense if the Fed is trying to tighten monetary supply like the article said then what better way then getting people to sign up and deposit it for a long time, this would basically remove dollars from circulation.
The Fed still gets to charge interest on that money since it only loaned it to the gubment and because it still exists, the gubment is still on the hook for paying for it.


so they're going to try and get people to do long term cds? like it's a 30 year treasury bond, only it's a cd?

[Sparky]

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

It is my understanding that time deposits are like CD's, they are deposited for a certain length of time which would make sense if the Fed is trying to tighten monetary supply like the article said then what better way then getting people to sign up and deposit it for a long time, this would basically remove dollars from circulation.
The Fed still gets to charge interest on that money since it only loaned it to the gubment and because it still exists, the gubment is still on the hook for paying for it.


Yes, but what action can the Fed take to increase the amount of time deposits, other than raise interest rates, which he's already listed as a way to tighten policy? That's the perplexing part of the statement by Fisher.

[chad]

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

It is my understanding that time deposits are like CD's, they are deposited for a certain length of time which would make sense if the Fed is trying to tighten monetary supply like the article said then what better way then getting people to sign up and deposit it for a long time, this would basically remove dollars from circulation.
The Fed still gets to charge interest on that money since it only loaned it to the gubment and because it still exists, the gubment is still on the hook for paying for it.


Yes, but what action can the Fed take to increase the amount of time deposits, other than raise interest rates, which he's already listed as a way to tighten policy? That's the perplexing part of the statement by Fisher.


maybe the'll come up with some sort of "fed cd" that offers 7% or something if you lock it up for a long period of time?

[Cobalt]

Fisher added that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling treasuries, changing reserves levels and using time deposits.

It is my understanding that time deposits are like CD's, they are deposited for a certain length of time which would make sense if the Fed is trying to tighten monetary supply like the article said then what better way then getting people to sign up and deposit it for a long time, this would basically remove dollars from circulation.
The Fed still gets to charge interest on that money since it only loaned it to the gubment and because it still exists, the gubment is still on the hook for paying for it.


Yes, but what action can the Fed take to increase the amount of time deposits, other than raise interest rates, which he's already listed as a way to tighten policy? That's the perplexing part of the statement by Fisher.


maybe the'll come up with some sort of "fed cd" that offers 7% or something if you lock it up for a long period of time?


I don't see that happening, the Fed is in the business of creating and loaning money not borrowing it.

[Spectrism]

They are facing the reality of a completely destroyed economy which, in the past, created "money" by borrowing it into existence at all levels of society. Mortgages, business loans, car loans, credit cards... many ways of creating new money have been exhausted.

The new method of creating money has become federal government spending. But this unequally divided benefit bestowed upon select recipients has NOT revived the previous businesses or borrowers. Those were dying because of political and social directions and throwing money at their corpses will not make them live.

So, what we are seeing is the emergence of new blood-sucking genetically mutated business entity. The old creature is dead and the new one will not allow them to just tighten their life blood away. I would rather be on a team of a dozen well-armed humans facing down thousands of brain-eating zombies, than be with Bernanke & Geithner facing their cousin vampire zombies and all the hoards of orcks that are about to realize the game is over.

[Tom Roscal]

the feds overnight widow will be the fortnight window. :)

[Ponce]

Even when oppening a savings account you have to be carefull, with one you can get as much as you want at any time and with the other one it takes time.........but of course for any large ammount you will have to give them time to bring it in from the main bank.

[Sparky]

They are facing the reality of a completely destroyed economy which, in the past, created "money" by borrowing it into existence at all levels of society. Mortgages, business loans, car loans, credit cards... many ways of creating new money have been exhausted.

The new method of creating money has become federal government spending. But this unequally divided benefit bestowed upon select recipients has NOT revived the previous businesses or borrowers. Those were dying because of political and social directions and throwing money at their corpses will not make them live.

So, what we are seeing is the emergence of new blood-sucking genetically mutated business entity. The old creature is dead and the new one will not allow them to just tighten their life blood away. I would rather be on a team of a dozen well-armed humans facing down thousands of brain-eating zombies, than be with Bernanke & Geithner facing their cousin vampire zombies and all the hoards of orcks that are about to realize the game is over.


OK. But what did he mean by tightening using time deposits?

[dys]

OK. But what did he mean by tightening using time deposits?


Probably a new buzz term used to condition people to accept something sinister in the future...in the vein of 'reset' or 'domestic terrorist'.

dys

[Spectrism]

They are facing the reality of a completely destroyed economy which, in the past, created "money" by borrowing it into existence at all levels of society. Mortgages, business loans, car loans, credit cards... many ways of creating new money have been exhausted.

The new method of creating money has become federal government spending. But this unequally divided benefit bestowed upon select recipients has NOT revived the previous businesses or borrowers. Those were dying because of political and social directions and throwing money at their corpses will not make them live.

So, what we are seeing is the emergence of new blood-sucking genetically mutated business entity. The old creature is dead and the new one will not allow them to just tighten their life blood away. I would rather be on a team of a dozen well-armed humans facing down thousands of brain-eating zombies, than be with Bernanke & Geithner facing their cousin vampire zombies and all the hoards of orcks that are about to realize the game is over.


OK. But what did he mean by tightening using time deposits?


The point is, he threw out a bankster term that did not apply to reality. If someone asks you how do you make your food supplies last, and you say that you could kill off some of your family, unless you are suspected of being a psycho, most would see through the jest. Now when banksters talk, all is in jest.

He also said the fed could sell treasuries. LOL... sure they can. Time deposits just lock up a deposit for time, requiring a holding time for a guaranteed rate. But this is all silly talk.

[dys]

He also said the fed could sell treasuries. LOL... sure they can. Time deposits just lock up a deposit for time, requiring a holding time for a guaranteed rate. But this is all silly talk.


For myself, I've learned to never discount offhand something that a banker says. There is almost always a purpose behind everything that these people say... they are nothing if not calculating. In this case, I would surmise the purpose to be conditioning. We are already starting to see forms of 'time deposit' materializing. For instance, many ATMs now have daily limits- even on purchases via debit and even if the purchaser has the money to cover the purchase. We also are starting to see withdrawel limits, and even without these limits it is being made much tougher for customers to get their own money. I invite anyone to try withdrawing a large sum of a money from a bank and see what I mean. They might give you the money, but not without a long process and a lot of red tape.

dys

[Sparky]

He also said the fed could sell treasuries. LOL... sure they can. Time deposits just lock up a deposit for time, requiring a holding time for a guaranteed rate. But this is all silly talk.


For myself, I've learned to never discount offhand something that a banker says. There is almost always a purpose behind everything that these people say... they are nothing if not calculating. In this case, I would surmise the purpose to be conditioning. We are already starting to see forms of 'time deposit' materializing. For instance, many ATMs now have daily limits- even on purchases via debit and even if the purchaser has the money to cover the purchase. We also are starting to see withdrawel limits, and even without these limits it is being made much tougher for customers to get their own money. I invite anyone to try withdrawing a large sum of a money from a bank and see what I mean. They might give you the money, but not without a long process and a lot of red tape.

dys


True enough. But what did he want us to think? He certainly didn't want us to think we should be wary about depositing money because we'll have a hard time getting it back!

[Bigjon]

A long time ago I read an article about how Rubin had changed US Treasury policy from borrowing long term money to borrowing short term money, which is much cheaper. That is how Clinton managed to pay down the US debt, by saving on interest costs. Time deposits are short term.

http://www.cnbc.com/id/41234372

The difference between the rates for borrowing money for 2-years from the government versus borrowing it for 30-years has reached 4 percentage points, an unprecedented steepening in the so-called yield curve that is puzzling prognosticators predicting it means anything from a strengthening equity bull market to a catastrophic downgrade of USA’s credit rating.

The record spread between the 30-year long bond [US30YT=XX 4.428 -0.009 (0%) ] and the 2-year Treasury note [US2YT=XX 0.645 -0.009 (0%) ] is new territory for bond fund managers, economists and traders alike. But the resolution of this anomaly will affect everything from mortgage rates to the price of bread.
~more~

[Sparky]

...

The difference between the rates for borrowing money for 2-years from the government versus borrowing it for 30-years has reached 4 percentage points...
...


I'm confused. This article makes multiple references to borrowing money from the government. When Treasuries are purchased, you are lending money to the government, not borrowing money from them. Who is borrowing money from the government?

What am I missing here?

[Bigjon]

...

The difference between the rates for borrowing money for 2-years from the government versus borrowing it for 30-years has reached 4 percentage points...
...


I'm confused. This article makes multiple references to borrowing money from the government. When Treasuries are purchased, you are lending money to the government, not borrowing money from them. Who is borrowing money from the government?

What am I missing here?


The article points out that the Fed is holding down short term rates. It is my conjecture that the treasury is funding the government via this short term money.

You are probably not missing anything. I didn't read the whole article.

[dys]

True enough. But what did he want us to think? He certainly didn't want us to think we should be wary about depositing money because we'll have a hard time getting it back!


I don't think he wanted us to think anything. It's a programming/conditioning thing. It's why you keep hearing the term 'reset' over and over. It's why the media prior to the 2nd Iraq war would always mention terrorism and Iraq in the same sentence. It's why the term 'home grown terrorist' was so widely disseminated and still is.

dys

[Mouse]

...

The difference between the rates for borrowing money for 2-years from the government versus borrowing it for 30-years has reached 4 percentage points...
...


I'm confused. This article makes multiple references to borrowing money from the government. When Treasuries are purchased, you are lending money to the government, not borrowing money from them. Who is borrowing money from the government?

What am I missing here?


The article points out that the Fed is holding down short term rates. It is my conjecture that the treasury is funding the government via this short term money.

You are probably not missing anything. I didn't read the whole article.


I think to properly sum it up, the Treasury is funding the FED via this short term money. The Treasury is a tool under the Fed, as is the rest of the .gov. So this implies that the Fed is in trouble and has been for some many decades. Just a blip I had in my programming while reading this. carry on

[Spectrism]

He also said the fed could sell treasuries. LOL... sure they can. Time deposits just lock up a deposit for time, requiring a holding time for a guaranteed rate. But this is all silly talk.


For myself, I've learned to never discount offhand something that a banker says. There is almost always a purpose behind everything that these people say... they are nothing if not calculating. In this case, I would surmise the purpose to be conditioning. We are already starting to see forms of 'time deposit' materializing. For instance, many ATMs now have daily limits- even on purchases via debit and even if the purchaser has the money to cover the purchase. We also are starting to see withdrawel limits, and even without these limits it is being made much tougher for customers to get their own money. I invite anyone to try withdrawing a large sum of a money from a bank and see what I mean. They might give you the money, but not without a long process and a lot of red tape.

dys


True enough. But what did he want us to think? He certainly didn't want us to think we should be wary about depositing money because we'll have a hard time getting it back!


You are asking the right questions. Yes- they play word games for a reason. I think he was trying to convey the idea that everything is in control and there is no need to fear inflation. He was throwing out terms to display his arsenal of inflation-fighting power. He is trying to convince (CONfidence game) people that they can trust the federal reserve to reign in any dangerous inflation.

[SLV^GLD]

Can you see the smoke you smell and can you be certain you are looking at the smoke or just seeing the reflection?