Start arbitraging rate differences

By Wolf Richter –  WOLF STREET

Americans hate, hate, hate inflation. But they’re liking the 5%-plus yields on their cash, and put a lot of cash to work by yanking it out of their bank accounts and putting it in 5%-plus T-bills, money market funds, and “brokered CDs” that they bought through their brokerage accounts.

And that has forced banks to compete for deposits, to keep deposits from fleeing, and to attract new deposits to replace those that did flee, by offering attractive interest rates. And Americans have flocked to those CDs too, and they are switching back and forth, arbitraging rate differences, thereby keeping banks on their toes.