How the banks make the big bucks 

The failure of banks in addition to global economic crisis has left the markets in shreds. I'm at crossroads deciding whether to hold on cash or put money in the stock market, and it's uneasy for me to not panic after a recent awful divorce, my goal is to retire with $3m

I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024

This is an absolutely outstanding explanation mate

Am i the only one who thinks that the guy is an awesome teacher ? It can be explained better even a five years old kid can grasp easily. Great job :)

Blessed is he who lends without interests

Well I'm certainly glad to have stumbled along these videos.

What a lovely example you drew of a banker family. This is probably how all bankers were raised. Taught to shaft their 'loved ones' first!

Simple, concise, but very deep! You are an exceptional teacher of finance!

thanks you! my business school never taught me this in 4 years

LOL! I totally called that Ben Bernanke move. I was thinking the government but close enough.

Wow guys remember work SMARTER not HARDER that’s the lesson here. Open your eyes

Why dosnt the US Treasurery go straight to the federal reserve then vs the banks???

you do excellent illustrations, it makes me understand it much easier.Thanks

THIS VIDEO IS SO AMAZING... It sums up simply what it takes people years and whole books to learn...

This is no education. This is an add for drinking booze. 😉 No. Great stuff, love it!

I appreciate the effort you made in making this clear to me ... thank you!

Best explanation ever ! thanks a lot !!

loving these videos

Many thanks for these videos.

thank you sir you made it easier

your videos are superb! thank you!!

Thanks Paddy!

lol I'm studying for my CFA, this guy wakes me up from the book reading.

Very insightful

I love the Bernanke drawing, these videos are great.

Great video!!!

fun and educative. best of both worlds. I love it

Great videos. Subscribed.

lmao does he say say "needing a drink" at the end of each video. This is the 2nd I've watched and this guy is awesome.

Even in the worst of times, banks likely continue to make loans to each other. One of the problems that occurred during the financial crisis was that bank confidence plummeted and the industry froze when banks stopped lending even to each other.

Nice explanation

Well explained

Why not straight from the FED to the Treasury?

Great video thank u :)

i lovd your videos

Hi Paddy Thank you for your great videos. I do have some questions, to see by which step the banks and the fed earn currency. Do the bank keep some of the government bonds? Or do they always sell all of them to the Fed? If the bank keep the government bonds they recieve interest, which the government garantees with taxes, so why do the banks sell the government bonds? Is it to be able to cover the monetary base? Do the banks receive a fee from the government or the Fed selling the bonds? How is that fee calculated? Or do the Fed ask a fee/discount from the banks by buying the government bonds? Is the Fed receiving interest on the government bonds and are they allowed to keep and spend it? Does the Fed gets a discount when it gives Federal Reserve Cheques to the banks? Do the bank storage Federal Reserve Cheques, or do they always recieve the sum in Federal Reserve Notes? What is the exact difference between a Federal Reserve Note and a Federal Reserve Cheque?

Laughed when Helicopter Ben came in the picture haha :D

This guy is a very good teacher. I'm pretty much a visual learner. I see the BANKS are doing a good job making money for themselves, Why lend to the public if you can make money like this. Also why we're they bailed out? Credit Unions,and Small Banks not in financial trouble are the favorite choice today.

very clever video

Exactly! We are slowly being bleed to death. Wealthy people have declared war on poor people and poor people as usual are at war with each other. Moral become rich fast. It going to get really bad at the bottom.

this dude is the shit, he should be the head of the fed. im getting my finance degree in youtube video watching.... oh boy i need a drink

you forgot to mention the part about the public getting stuck with the debt borrowed by the treasury. 18 trillion and growing!

@millball because that would ask why the Treasury isn't printing the money but instead borrowing it from a privately owned entity, and the banks would also have to deal with their own mess of overleveraging, which would/could make some of them go out of business.

So technically my saving is helping the banks to make more money without even getting nothing. 😂😂😂

Hi! Your vids are awesome! :)

I think we can learn from RU-vid if we choose the right staff.

Add to that the fractional reserve banking and it'll be astronomical cash.

@millball the fed can loan money to other BANKS, which the treasury is not; hence the term interbank loans. What can happen though is that the fed decides to buy t-notes, bonds, assets, etc through quantitative easing which they have done 3 times in the past few years.

Perfecttly explained for what is happening now

Where do you buy treasurey bonds, I can only find NS and I, which gives you 1 percentage

Which system is it wherein banks invest your the cspital you provide for savings CDs etc they make a large gsin but they give you 1 or 2 % return and keep remaining 7 or 8% for themselves?

Loved it!!! Esp. free money from daddy/Fed, lending risk free to mommy/Treasury haha!! Loved it !!! So simple, and profound. Thanks a zillion!!

@millball the answer is on page 149 of the book "What Went Wrong with Economics" (search on amazon).

Thank you for these great tutorials. Just a bit confused how the fed makes money if they loan banks at 0% interest rate?

5:20 when you start laughing and crying at the same time

@MrBipBipp makes sense, thanks for the clarification

LOL @ The drawing of Ben Bernanke.

Please do a video on rehypothecation and prop trading.

Haha Mr. Hirsch is quite a character and a bad ass teacher to boot. More vids!!!

i bet if the camera scrolls down, he's standing in a pile of pens

Fractional Reserve banking...The same money is lent many times over.....Sleight of hand.

Bonds that are issue by the government are considered risk free because the government could always tax ppl or print more money if it needs to give money back to the investor

Great work! - From Toronto, Ontario, Canada! - If these were on a DVD series with RU-vid I'd purchase!! - I wish you were my professor/teacher!!

And all the interest paid from the government to the banks is actually taxpayers money or new money (which creates inflation sooner or later affecting the taxpayers as well). So in the end the whole population is feeding the banks with huge profits while they suffer diminishing purchasing power and liberties. You can call it theft or counterfeiting.

Why doesn't the fed give direct to the treasury and cut the banks out. Doesn't make sense!

Which is true. 1) money is deposited and banks make loans from that deposited OR 2) Banks make loans and then deposits are made

So what does the treasury do? And, why can't they just get money directly from the feds? HELP!!!

End The Fed Act

somebody give this man a medal

I didn't know that people borrow money from the bank just to lend it to other people? I thought people borrow to either fund their business or buy a house? Can someone please explain?

Well I'm a believer in real assets in general not just precious metals. I think stocks, bonds, realty even collectibles are just as good for storing wealth. As for making it, be in whatever market is moving.

So why doesn't the treasury borrow straight from the fed???

How about fractional reserve lending system? Surely, allowing banks to lend MORE than they actually have is a bigger problem?

The bankers of course love this system. Who wouldn't love free money? But it is not the banks that are at fault. If the Fed gave 'you' free money, would you then be at fault? The problem is with the concept of the Fed itself, the idea that a central bank can simply invent money out of thin air (literally) and give it to whomever it wants, and the people and Gov aren't even allowed to know to whom it gives the free money! Support bill HR 1207: Audit The Federal Reserve

what can they give money to Treasury directly without going through the banks?

@millball because it would have to have the money to buy. which it doesnt. all money in circulation comes from a loan. you cannot buy from someone with money you have been loaned from them in the first place.

Are banks claiming to be the beneficiary of the estate(s) - original issue?

if you want a more detailed explanation, Milton Friedman more than 30 years ago: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-THAaIZmxfNA.html

It has, they are called Credit Unions.

We should take all our money out of these banks on a set date, with a better plan set up in advance.

#CFI #CFA ... prepatory projections

This would be a great strategy except, in real life banks charge higher interest then government bonds pay and banks don't lend money to individuals to buy financial instruments without collateral.

Loan Sharking is illegal tho... Because all that profit you make isn't taxed. So the country will think you tax evasion.

I'm livid!!! HOW?!?! UGHHHHH.

In other words it is: ONE BIG SCAM.

Please explain, where does the feds get the money to lend to the banks in the first place? Do they just print money like they showed in 'Money Heist' Netflix series? Your input is appreciated...

and to top it off Chase owns stakes in the Fed AND would be bailed out if it's investments ever failed! YAY!

Why doesn't the treasury get money directly from the fed at no interest? What is the purpose of having the banks in the middle when relevant to the treasury? I have also heard the treasury buys their bonds from Glodman Sacs(spelling?)

Why the hell does the US Treasury have to borrow money in the first place? Creature from Jekyl Island?

If you think housing subprime is ominous, you ought to check out the Fast Food Subprime Mortgage. That's right! McDonald's, Burger King's, Chick-fil-A, etc. etc.. Many are financed by the U.S. Taxpayer through Government Guaranteed financial institutes called CDFI or Community Development Financial Institute banks to minority recipients that do not have enough money or credit to qualify. It's Washington picking winners and losers, and your no winner. It's in the TRILLIONS! Shadowed into the OTC Derivatives market.

so I should just buy bank stocks?

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Why doesn't the fed just loan the money directly to the treasury?? arent they both govt agencies...?

Why doesn't the Treasury not just buy from the Fed?

If you really know what you are doing, yes. But stocks can tumble if the markets for the companies that issued the stocks, are in a prolonged recession. Bonds can default if the bond issuer goes bankrupt, and that can easily happen to a government (and will to the US). And collectibles only hold value as long as there are collectors who have spare money to put into their collections. In a major crash, the value of collectibles could evaporate. Gold and silver are for me, safer.

The FED was responsible for the 08 crash. The government poured the wine and Wall Street got drunk ~ Peter Schiff.

@stephenddblyth it gets money from taxes, hence why everything is taxed.

He left off the part where the interest that the Treasury pays is paid by taxpayers in the form of taxes that they pay which leaves the taxpayer less money to live on. In effect the taxpayer is making the Bankers (Elites) rich

Treasory bonds are not 5% when the Fed is lending to banks at 0.25%???

- At the end u meant treasury got a 'borrower' right? - lol wondering if u can just put the pen under the white board :P