My America

A middle-aged man in a hurry, just passing the door of Union Bank, suddenly stopped and looked at the Union Bank sign, and asked suspiciously, "Your bank is closed?"

"Look at what you said, of course our bank is in normal business." The bank employees standing at the door are not happy. Although the interest rate of Union Bank is very low, the business is very bad, but it is still far from failure.

The indifference at the entrance of Union Bank surprised the man and asked, "Really, what business does your bank have?"

"You can save money, you can withdraw money, so far so many." Bank employees replied with a serious look.

The man looked at another bank not far away. He had just withdrawn money from that bank. There was a long queue at the door of the bank, and the door of the United Bank looked very normal, just like normal business, the two are compared. At this time, Union Bank suddenly felt a special sense of security and said directly, "I want to save money!"

Interest rates are no longer important at this time, and being able to save and withdraw money is more important than what interest rates are.

What are banks most afraid of? It's a run, this place that theoretically has countless cash, afraid of depositors to withdraw money. Swarms of depositors either get their money back or transfer large amounts of money to other safer institutions. At the same time, it's not just depositors taking away their money, the borrower will also know that the bank may not be able to renew the loan after repaying the loan, and choose to default.

For the largest financial institutions, the liquidity crisis—especially the lack of available funds, the increase in financing costs, and the increase in non-performing loans that reduce cash flow are also very fatal.

The first run was in the Roman Empire, and I am in the New Rome of the United States. This is not surprising. When money market investors learned that there was a problem with the bank ’s loan portfolio, the hot money suddenly left and the bank was forced to borrow from government agencies to survive.

In theory, this is the best way for banks to survive the crisis. However, there is no central bank in the United States. Both the first bank and the second bank have existed for 20 years, and they closed down under heavy opposition. Therefore, such an escape strategy that other banks in general can choose cannot be achieved in the United States alone.

Two attempts to establish a central bank in history have encountered setbacks: there have been no subsequent attempts to establish a central bank. Because any bank reform plan as long as it involves the establishment of a central bank, all of them are opposed by citizens of the United States and end in failure.

Successive Ministers of Finance of the United States have continued to expand the power of the Ministry of Finance and intervened in the currency market by adopting indirect control methods of placing or withdrawing surplus currency from the Ministry of Finance. Since the Federal Ministry of Finance itself is not a central bank, it does not have the power to issue currency, nor can it mobilize the reserves of private banks. The indirect control methods it adopts are often insufficient to deal with sudden financial crises. In fact, it only has a certain function of preventing financial crises, but not anti-crisis functions.

The Chicago Daily Times seemed to understand that its inadvertent loss caused panic among Chicago residents. As an attitude newspaper, the editor-in-chief of Albert immediately began to remedy and sent a senior excavator to stabilize his emotions.

The newspaper the next day calmed down with the calmness of Sheffield Union Bank, saying that there was nothing to panic about.

To this end, I also interviewed the managers of Chicago United Bank, and conducted a special report, let the bank managers talk about this unexplained panic, and United Bank's response plan.

"Our Union Bank ’s capital reserves are unparalleled. As for the response? The interest rate is half that of other banks for a long time, and it attracts quality customers. If there is really a response, we received a call from the headquarters and the interest rate was reduced to percent Second, it is one percentage point lower than before. "The manager of Chicago United Bank said eloquently.

"Maintaining market liquidity through interest rate cuts, and because our joint bank's capital reserve is extremely strong, if all banks can adopt interest rate reduction policies, the cash in the market will increase liquidity."

There is nothing in Union Bank that dares to cut interest rates. Originally, there was not much money in the bank. It was entirely supported by the slave owners. There was not much money, and there were not many depositors. Without back pain, I am already so miserable, still afraid of lowering interest rates?

Other banks are another case. These banks have many depositors, which is much stronger than Union Bank. The sad thing is that there are so many depositors, but there is not much cash in these banks, which can resist the depositors' cash out.

After the report on this day, a long line also appeared at the entrance of Union Bank, but these people came to save money. If it is a hundred years later, once the United States cut interest rates, it means that water will be released to increase liquidity.

Now without the Fed, seeing that the run-up has rushed out of New York and headed across the country, Union Bank announced that interest rate cuts simply cannot increase market liquidity, because Union Bank has no money at all.

Dare to do this without money or running pressure. Blair ’s headquarters at Union Bank of New York announced that Union Bank ’s banks nationwide would cut interest rates to 2%, and also called on other banks to follow suit, which would increase market liquidity.

Of course, Sheffield is the person who knows the truth of Union Bank most. Union Bank ’s money is his own. Excluding this part, the deposits of the national depositors are less than 10 million. How much cash is paid by employees of various industries of the United Company.

The largest customer of Union Bank is the boss of Union Company, the slave owner himself, who is rich and not afraid of running. This is the main reason for Blair to become a public enemy at this time.

It is impossible for the funds and account funds in other banks to have the ratio of Union Bank. Union Bank is almost 100%, and the largest customer Sheffield is deducted. It is just a bank that can save money and withdraw money. The other banks have a high percentage of 25%, many are only 5%.

This ratio is bound to go bankrupt because there is no money in the bank and only a lot of depositors. What makes Union Bank different now is that it has no depositors and no cash but slave owners, and other banks have depositors and no cash.

"Rate cut? I said how Chicago United Bank came up with this operation, it seems that Blair made it." Sheffield smothered the cigars that had been smoked, and was very satisfied with his frugality. "But now financial institutions With banks and trust companies full of triangular loans, it is indeed a clear stream. "

"Why do your banks dare to do this? Isn't the proposed rate cut to be an enemy when other bank debts are so severe?" Edith Rockefeller didn't understand why Union Bank proposed this.

"If our country has a central bank, interest rate cuts will definitely be useful. But our country does not!" Sheffield raised an eyebrow and said, "Blair claimed that the rate cut can avoid the crisis and it is correct, at least it can be delayed. Banks, other banks and financial institutions have huge debts and dare not follow interest rate cuts, because these banks have no money in their accounts and only have large depositors. They are afraid that they will be too late to run. How can they cut interest rates? "

"Everyone hopes to run over quickly, and your bank is going to cut interest rates. It's just pushing them to death!" Edith Rockefeller was shocked when she heard Sheffield's words. This is crazy. His own man obviously hopes that the run-off will spread across the country and all the problematic banks will go bankrupt.

"My dear, can't you say that, if the cash flow of other banks is healthy, everyone will come together to cut interest rates is definitely the fastest way to quell the run. Now most banks object, it can only show that the run they are facing now is It makes sense. Even if there is no matter about Nick Burke Trust Company this time, the problem will only become more serious if it is delayed for a year or two. "Sheffield denied that Edith Rockefeller framed himself.

How could slave owners want all domestic banks to fail? Even if you really hope so, you can't admit it.

Using historical materialism to explain the relationship between chance and necessity, there is only one central point, and the plight faced by many other banks now is entirely their own problem. Even if the whole body retreats this time, if the problem is not corrected, it will certainly repeat the same mistakes. The biggest lesson from history is that people never learn people and lessons.

As for Blair's operation of letting the United Bank play the Fed, Sheffield raised his hands in favor. Anyway, this is the case with United Bank, and this fire will never burn itself. Let the market decide who is the most qualified to survive. Is n’t this the competition that the United States has always advocated? How can it be the bankers ’own turn?

The role of interest rate cuts is to allow investment expansion to make up for the lack of growth momentum caused by the sluggish consumption, enhance market expectations, and curb economic activity in the absence of confidence. But the problem now is that most banks are facing a run-up trend. For the current banks, trust companies and financial institutions, the interest rate cut is just looking forward to their failure.

The run of money soon spread to other trusts and began to spread to commercial banks. Even mainland banks and depositors have begun to withdraw deposits from New York. The cash supply in the New York money market is already tight, and the stock market is bleak. Pessimism is spreading, and Wall Street is full of people withdrawing money. Even outside the most reputable banks, anxious depositors lined up.

The violent withdrawal of people has blocked the door. Now that the director of the former Nick Burke Trust Company wants to make everyone cut interest rates, it is crazy. Do you want everyone to die together?