Well, this is good news for Goldman Sachs (GS). They weren’t the only major bank to go all of Q1 without a single day of trading losses. In other words, the game isn’t necessarily rigged in their favour.
If you don’t know how the banks can do this, you haven’t been paying any attention. It’s the Fed lending these banks money cheap allowing them to lend it back to the government at higher rates? Is that really all the banks are doing with their money? Pretty much yes.
From the St. Louis Fed, here’s the total volume of government securities held on bank balance sheets. The number is only going in one direction.
Photo: St. Louis Fed
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