Clusterstock has detailed and easy-to-follow instructions [1] 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.)
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!
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