Is the following press release good news or bad news for JPMorgan Chase?
JPMorgan Chase Tops Nation in Deposits
Customers add $96 billion in net deposits in last year, bringing the total to $1.3 trillion.
For the first time in 23 years, JPMorgan Chase & Co. led the nation in total deposits as consumers and businesses added $96 billion to their bank accounts in the last year.
The Firm’s U.S. deposits grew 7.9 percent to reach $1.3 trillion on June 30, 2017.
Over the last five years, customers added $447 billion in deposits, a 51 percent increase.
“Customers continue to trust us with their money as we help them bank whenever, wherever, however they want,” said Thasunda Duckett, CEO of Consumer Banking at Chase.
See how proud JPM is.
If the Committee for a Responsible Federal Budget (CRFB), the federal debt worry-warts, had written this article, it would have read like this:
JPMorgan adds $96 billion in debt in last year, bringing the total owed to customers and businesses to $1.3 trillion.
For the first time in 23 years, JPMorgan Chase & Co. led the nation in total debt as it borrowed $96 billion more in the last year.
The Firm’s U.S. debt grew 7.9 percent to reach $1.3 trillion on June 30, 2017. Over the last five years, JPM borrowed an additional $447 billion, a 51 percent increase.
Allow me to assure you, that the above two news releases are identical, except for the substitution of the word “debt” for “deposits.” In this context, the two words mean the same thing.
The CRFB endlessly tells you that the federal “debt” totals so many trillions, and this is a bad thing. But they really are talking about the total of deposits into T-security (T-bills, T-notes, T-bonds) accounts.
T-security accounts are essentially identical to bank savings accounts and CDs.
When you buy a T-security, that is very much like buying a bank CD, or making a deposit into a bank account. It creates a bank “debt,” but you don’t call it “debt.” do you? You call it “deposits.”
There is are two big differences between deposits with the federal government and deposits with your bank:
- The federal government is Monetarily Sovereign. It never can run short of its own sovereign currency, the U.S. dollar. It never can go bankrupt. Your money is 100% safe. Your bank, by contrast, is monetarily non-sovereign. It can run short of dollars. It can go bankrupt.
- Because the federal government is Monetarily Sovereign, it has no need for your dollars. So it simply leaves your dollars in your account until maturity, at which time it returns them to you, plus interest. Your bank, by contrast, needs and uses your dollars. So when the time comes to return them, your bank may not have enough.
In short, JPMorgan Chase & Co. and their CEO of Consumer Banking, bust their buttons boasting about the amount of deposits they hold, while the CRFB wrings its shaky hands about the amount of deposits the much safer federal government holds.
Ironically, the federal government is so much safer than banks that when a bank goes under, it is the federal government’s Federal Deposit Insurance Company that bails out the depositors.
No bank ever is called upon to bail out the government, but you wouldn’t know that by reading the CRFB nonsense
It’s absolute craziness, but the CRFB relies on your not understanding that your purchases of T-securities are deposits in your T-security accounts. The CRFB uses semantic confusion to make its false case, and sadly, your politicians go along with the ruse.
And as long as you keep quiet about it, or believe the “government is in debt” lie, your politicians will continue to tell you the government can’t afford benefits to you, and that you taxpayers are on the hook for federal “debt.”
Bull excrement is hard to wash off when you’ve been covered for years.
Rodger Malcolm Mitchell
Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.
Implementation of The Ten Steps To Prosperity can narrow the Gaps:
Ten Steps To Prosperity:
1. Eliminate FICA
2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone
3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10. Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.
5 thoughts on “Is this good news or bad news for JPMorgan Chase?”
One of your most persuasive and ingenious commentaries, Mitchell! (…and I read most of them).
Now if we could just get Roger on Meet The Press opposite a bunch of economists. I’d be willing to bet Roger would do it, but the show would be cancelled on account of the economists suddenly having “other commitments” in their busy schedule.
Great blog, Rodger… continue to be a big fan of your informative posts.
While you portray debt as an accumulation of deposits, the debt hawks see it as an accumulation of continuous deficits over the years… unsustainable, they argue!
The naysayers counter that these so-called deposits are a direct function of deficits. $1 deficit spending results in a $1 of forced deposit… mostly by foreign entities.
In this post’s context, JPM does not carry that baggage, of being forced to accept deposits at investors’ terms. What’s a good counter?
The US government is not forced to accept deposits, and the deposits are on the Treasury’s terms. It issues what it wants to issue at the interest it wishes to pay. If no one wants them, the Fed will buy them.
It is true that the deposits = deficits, but that is only by US choice. The Fed itself has the ability to buy T-securities (make deposits) in unlimited amounts, which it often does (aka “quantitative easing.”)
There is no evidence ever given why deficits are “unsustainable,” and nothing shows they can’t be sustained.
The total deposits in 1940 were $40 billion. Today, they are $16 trillion, a 40,000% increase. Still sustaining.
Why is it bad for foreign governments to make deposits in our bank?