So here’s how to make the world’s easiest $1 billion:
STEP 1: Form a bank.
STEP 2: Round up a bunch of unemployed friends to be “bankers.”
STEP 3: Raise $1 billion of equity. (This is the only tricky step. And it’s not that tricky. See below.*)
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.
In a nutshell, it’s time for legal differentiation between banks and bank-like-things.