Did anyone say that a Swiss person could do that? The free lunches may appear to be on the menu but that doesn't mean they ever get to the table.
I understand that there is no way you could get a free lunch and that is where my problem is. If the interest rate goes negative for borrowing then it (seems to me) that you could get a free lunch (which just cant be). What am i misunderstanding? Take note that my only knowledge of economics is a macroeconomics text book that i bought at salvation army for 50 cents and read on my breaks at work
Exactly right. The only thing a ponzi scheme absolutely requires is that it be kept going for appearances. Truly, you may want to go long now until this can is kicked even further down the road to the next presidency, or whatever event may end the ponzi scheme. But the Fed and the Treasury definitely have more fire power to keep it going at this stage. There's still time to make money on the upside.
No major economics involved here. You are not the market maker. And none of the market makers will quote a negative ASK (key word being ASK) on the money to a retail customer/ The market is negative two bid. You put money in you lose two point a year. And it is one (not negative one ... just 1%) offered. If you lift the offer you are paying 1% on the money. That's a very short term rate so you can't go out and but long term assets without runnibg the risk of that rate going up.
what about the CNY which is quoted at -12 bid /-11 ask here at Oanda: https://fx1.oanda.com/user/interestrate.html
This is a joke, right? You're doubling bill-rates and 30bp over LIBOR while holding a conversion? NEW MATHS!
It's a FOREX rate not a retail rate that you can take as a bank deposit. The "deposit" never leaves the FOREX house. It never gets to a bank account you control, it never gets to currency ... it never hits your hands in a way that you can use it outside of the context of that trade. So what you have is a situation where they have lent you X CNY (say a million dollars worth) and you now own a million in dollars. They will pay you about 1% a month to be short CNY and you will pick up whatever the current carry is on the dollar. So you may earn a total of 1% + per month for taking the risk of being short CNY. I'm not saying that is a god bet or a bad one (frankly I have no idea) but that is the nature of where you are post that trade. You have no access to that million outside of the context of that trade. You have made a trade and your profit is linked to the trade not to your alternate uses of the million US. Now ... if you owned a financial intstitution that was high enough rated to be a reliable counterparty the equation would change.
Thank you for your detailed explantion. I thought that the bid ask quoted was just for money in that currency in general whether it be forex; a personal loan or whatever purpose that someone wanted to borrow or loan money in the currency.
Go do the research for yourself, there are ~2.9% conversion opportunities available. You can get it with spiders, or GE, w/ the assumption that you get filled at slightly worse than mid-point on all 3 legs (which is a reasonable assumption when you place the order as a single multi-leg order)