Posted by WARREN MOSLER on February 1st, 2012
Another Gross error.
Bank’s aren’t allowed to take what’s called ‘interest rate risk’ by borrowing short and lending long.
It’s the first thing the regulators and supervisors look for.
It’s the S in CAMELS ratings- Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity to interest rates.
By Jeff Cox
Feb 1 (CNBC) — The Federal Reserve’s zero-interest-rate policy is hampering economic recovery by discouraging bank lending, Pimco bond titan Bill Gross said in an analysis.
For banks, a healthy lending environment exists where they can borrow at low rates in the short term and lend at significantly higher rates over the long term, a situation that creates a profit through a positively sloped yield curve