So who wants to be a billionaire?
Clusterstock has detailed and easy-to-follow instructions to making ridiculous amounts of easy money. Start by forming a bank, hire all of your friends as bankers and raising some capital. After those preliminary steps, the hard part is done:
STEP 4: Borrow $9 billion from the Fed at an annual cost of 0.25%.
STEP 5: Buy $10 billion of 30-year Treasuries paying 4.45%
STEP 6: Sit back and watch the cash flow in.
At this spread, you should be earning at least 4% per year on your $10 billion of capital, or $400 million. Sure, there’s some risk that the Fed will grow a backbone and raise short rates, but there’s not much risk. (They have an economy to fix and banks to secretly recapitalize). And in any event, if the Fed raises short rates, making your $1 billion will just take a bit longer. (And if they REALLY raise rates, causing you to actually lose money, it will be someone else’s problem.)
BE the bank! Image via Wikipedia (commons)
Making that kind of money, you can pay out insane bonuses and still have enough profitability left to take the bank public and start to make some serious coin!
Brynn: Alternate plan: How much intelligence does it take to obtain money at essentially 0% interest and then lend it out at [name your integer of interest]?
In either case, too bad we can’t all be big banks with that kind of power.
We could simply get rid of fractional reserve banking!!!
http://en.wikipedia.org/wiki/Fractional-reserve_banking
From Huffpo, summarizing a story from Bloomberg:
The program that was supposed to help banks dispose of these toxic assets instead made those assets so marketable that banks bought more — and are now at even greater risk. The banks apparently decided that the government’s entry into the mortgage security market was simply a guaranteed money-making opportunity.
http://www.huffingtonpost.com/2010/01/04/ppip-banks-making-a-killi_n_410203.html