Isn't this the kind of greedy crap that got them into the fractional reserve mess in the first place?

Bond Prices Rise as Banks Snap Up Short-Term Securities The Associated Press

NEW YORK (AP) - Treasury securities prices rose on Wednesday as banks went on a minor buying spree, spending cash that had been injected into the banking system by the Federal Reserve in preparation for Y2K-related problems. The price of the benchmark 30-year Treasury bond rose 11/32 point, or $3.44 per $1,000 in face value. Its yield, which moves in the opposite direction, fell to 6.45 percent from 6.47 percent late Tuesday.

Short-term securities were the biggest gainers. Banks with extra cash prefer buying short-term Treasury bills because they can quickly sell them if they need the money.

The central bank had ordered the extra money in the event people drain funds from bank accounts or rush to ATMs late in the year, amid concerns that Y2K-related computer glitches may make it tough to get access to cash.

http://ap.tbo.com/ap/breaking/MGIK5NPKT2C.html

-- C (c@c.com), December 29, 1999

Answers

This story doesn't make sense. I'm sure the fed injected reserves. But its difficult to join the that story with the increased supply of green backs. Banks can't use green backs while sitting in their vault to buy treasuries. Green backs for banks don't earn interest just like they don't earn interest for you and me. If the banks have the green backs picked up by armored car and sent to the fed to buy treasuries then they won't have the green backs now that are supposed to avoid the bank runs (run in sentence).

-- gary (a@a.com), December 29, 1999.