Fundamentals, page-55

I think you're smart but You can't see the collapse of the soon to be USD.

What is the negative effect of the post-rate hiked and how do volatilities measure the US banks ways to recovery.

Since GFC the Fed had expanded its Reserve Repurchase program from 300 billions to 2 trillions as today.

The program is called Reserve Repo Rate, RRP
RRP is conducted with money market muture funds, brokers and dealers as It's served ro DRAIN the excess liquidities for the money markets.
RRP is raised from 0.05% to 0.25%. It's the benchmark rate for interconnection banks around the world.

The interest on excess reserve, IOER, is increased automatically in conjunction with the US rate benchmark which is raised from 0.25% to 0.5% as today.

How is the Fed going to manage at this new rate, 0.5%?

.The Fed really wants to flood the 2 trillions reserve in a hope that US inflation is picking up at current mark 0.5% where the inflation is the main gauge to achieve more stable prices, in other words, to achive higher prices in a deflationary environment.

The USD is FLOODING the markets and It keeps rocketing against all major currencies because of its solvent status.

Are those massive liquidities useful in struggling economies or are they abandoned due to a CARRY TRADE.

Do they really help US corporates where the junk bonds have just facing a recent selloff. Do corporates willing to pay higher intereste rate.

If investors offer to lend the Fed more than the Fed is willing to borrow. The central bank WOULDN'T keep its interest rate in its current target range, the IOER.

As the US increased its rate, the US will attract a lots of investments in the near future as the economy is enjoying the trade advantage where other countries are lowering their rates.

Investors will borrow cheap credits elsewhere to invest in US banks.

How US banks are going to cope with their strong balance sheets and additional capacities. Are they able find growths.

US banks Reserve Requirement Ratio has been controlled by the Fed's BASE3 policy. The Fed had limited banks lending to risky assets.

The Fed also pay dividends to banks where they were happy to receive a 6% dividend to buy the Fed's stocks which they are mortgage backed securities and others.

Since the Highway infrastructure bill is going to be effective at the end of 2015. The bill will draw 19 billions out of the Fed capital surplus account to leave the rest of 10 billions in which the account is capped at that level.

The Fed surplus account will reduce banks dividends to 2.2% which is in line with 10 treasury notes.

This is forcing the banks to seek more risky lending loans.

90% US mortgages are fixed at the previous rate.

Most of US corporates will issue international bonds because they don't want to pay higher yields in their home land.

Other countries are trying to devalue their currencies. They also try to sell US foreign reserves to prop up their extremely undervalued currencies.

Take Argentina as an example.
Argentina banks are buying USD in light of the devaluation announced by the Government today. Banks are trying to buy their Peso to protect the currency from falling further. That why pog is at 1050.

For consumers, they are going to buy Gold as they know Gold is a diehard asset, a storage of wealth and the best investment in volatilities world.

Is the collapse a reality. I'm watching the 6 major US banks to see if they could possibly make a tiny profit.

All of the sudden there are massive capitals and the banks cannot find customers. It's like an oil glut with a lack of demand.