Tag Archive for: duration mismatch

Sam Bankman-Fried FTX’ed Up

Sam Bankman-Fried FTX’ed Up

You can listen to the audio version of this article here. Last week the cryptocurrency exchange FTX, which was recently valued at $32 billion, imploded. While the tragedy continues to play out, let’s summarize what has happened so far: FTX is a cryptocurrency exchange, co-founded by Sam “SBF” Bankman-Fried. FTX enables customers to make leveraged […]

How to Build and Destroy a Pension Fund System in 22 Easy Steps

Step 18

How to Destroy a Pension Fund in 22 Easy Steps CEO of Monetary Metals Keith Weiner gave a talk at the New Orleans Investment Conference on how to build and destroy a pension fund system in 22 easy steps. If you’d like to see an excellent case study of these steps in action, see the […]

Why Duration Mismatch Will Always Fail

I have written a number of pieces on fractional reserve banking and duration mismatch.  I have argued that the former is perfectly fine, both morally and economically, but the latter is not fine.  I have dissected the arguments made against fractional reserve banking, and pointed out that it is nothing more than a bank lending […]

Falling Interest Rates Destroy Capital

Falling Interest Rate

I have written other pieces on the topic of fractional reserve banking and duration mismatch, which is when someone borrows short-term money to lend long-term and how falling interest rates actually encourage duration mismatch. Falling interest rates are a feature of our current monetary regime, so central that any look at a graph of 10-year […]

Falling Interest Rates and Duration Mismatch

Since 1982, US Treasurys have been in a bull market. This is Exhibit A: the yield on the 10-year Treasury bond (the yield and the market price of the bond are inversely related, like a teeter-totter). This statement should not be controversial. But outside Austrian circles, most people don’t understand that this structural decline is […]

Fractional Reserve Is Not the Problem

In the United States, there are once again TV commercials advertising Adjustable Rate Mortgages (ARMs) for residential real estate.  Today, I saw one from Quicken Loans promoted with the tagline “why pay more in interest charges now just to know what rate you will have in 2018?” (they are offering a 7-year “teaser” rate and […]

Fractional Reserve Banking

There is an old erroneous view of fractional reserve banking. “Naturally, all fractionally reserved banks are de facto insolvent at all times…” The Acting Man blog is usually very good, but it published an article by Pater Tenebrarum containing this comment (http://www.acting-man.com/?p=6781).  If there is a weakness in Austrian School thinking surely fractional reserve banking […]

The Decline and Fall of Silver Backwardation

On Friday, I published an article: http://dailycapitalist.com/2012/02/17/the-arbitrageur-silver-backwardation/. I was the only one to cover the news of the end of silver backwardation. And I gave my prediction that the price of silver could correct sharply. This piece presents my analysis and theory of what happened. This will necessarily include some educated guesses, as the big […]