Tag Archive: bank reserves

A Volcker Pan Recession

2022-06-10

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2022-06-10

The Volcker Myth is simple because there isn’t math for it just voodoo economics (to borrow George HW Bush’s phrase). In theory, the FOMC finally realized after more than a decade of currency devastation and its economic, financial, and social consequences, hey, inflation and money.

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Collateral Shortage…From *A* Fed Perspective

2022-05-07

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2022-05-07

It’s never just one thing or another. Take, for example, collateral scarcity. By itself, it’s already a problem but it may not be enough to bring the whole system to reverse. A good illustration would be 2017. Throughout that whole year, T-bill rates (4-week, in particular) kept indicating this very shortfall, especially the repeated instances when equivalent bill yields would go below the RRP “floor” and often stay there for prolonged periods....

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The (less) Dollars Behind Xi’s Shanghai of Shanghai

2022-04-25

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2022-04-25

What everyone is saying, because it’s convenient, is that China’s zero-COVID policies are going to harm the economy. No. Economic harm of the past is the reason for the zero-COVID policies. As I showed yesterday, the cracking down didn’t just show up around 2020, begun right out in the open years beforehand, born from the scattering ashes of globally synchronized growth.

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I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

2022-04-21

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2022-04-21

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape.

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What Does Taper Look Like From The Inside? Not At All What You’d Think

2021-11-05

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2021-11-05

Why always round numbers? Monetary policy targets in the post-Volcker era are changed on even terms. Alan Greenspan had his quarter-point fed funds moves. Ben Bernanke faced with crisis would auction $25 billion via TAF. QE’s are done in even numbers, either total purchases or their monthly pace.

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The Great Eurodollar Famine: The Pendulum of Money Creation Combined With Intermediation

2021-10-13

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2021-10-13

It was one of those signals which mattered more than the seemingly trivial details surrounding the affair. The name MF Global doesn’t mean very much these days, but for a time in late 2011 it came to represent outright fear. Some were even declaring it the next “Lehman.”

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Tapering Or Calibrating, The Lady’s Not Inflating

2021-10-07

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2021-10-07

We’ve got one central bank over here in America which appears as if its members can’t wait to “taper”, bringing up both the topic and using that particular word as much as possible. Jay Powell’s Federal Reserve obviously intends to buoy confidence by projecting as much when it does cut back on the pace of its (irrelevant) QE6.

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CPI’s At Fives Yet Treasury Auctions

2021-08-12

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2021-08-12

A momentous day, for sure, but one lost in what would turn out to be a seemingly endless sea of them. October 8, 2008, right in the thick of the world’s first global financial crisis (how could it have been global, surely not subprime mortgages?) the Federal Reserve took center stage; or tried to.

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The FOMC Accidentally Exposes Itself (Reverse Repo-style)

2021-06-18

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2021-06-18

UST Yield Curve, Mar 2021 - Jun 2021
Initially, the dots got all the attention. Though these things are beyond hopeless, the media needs them to write up its account of a more fruitful monetary policy outcome because markets continue to discount that entirely.

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Rechecking On Bill And His Newfound Followers

2021-04-09

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2021-04-09

The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard).

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Even The People ‘Printing’ The ‘Money’ Aren’t Seeing It

2021-02-07

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2021-02-07

Inflation Europe, 2007-2020
Everyone in Europe has long forgotten about what was going on there before COVID. First, an economy that had been stuck two years within a deflationary downturn central bankers like Italy’s new recycled top guy Mario Draghi clumsily mistook for an inflationary takeoff. Both the inflation puzzle and ultimately a pre-pandemic recession have taken a back seat to everything corona.Whereas Draghi spent those years howling for inflationary conditions...

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Meanwhile, Outside Today’s DC

2020-11-05

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2020-11-05

German Economy, 2012-2020
With all eyes on Washington DC, today, everyone should instead be focused on Europe. As we’ve written for nearly three years now, for nearly three years Europe has been at the unfortunate forefront of Euro$ #4. We could argue about whether coming out of GFC2 back in March pushed everything into a Reflation #4 – possible – or if this is still just one three-yearlong squeeze of a global dollar shortage.

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Part 2 of June TIC: The Dollar Why

2020-08-21

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2020-08-21

Federal Reserve: H.10 Foreign Exchange Rates, 2008-2020
Before getting into the why of the dollar’s stubbornly high exchange value in the face of so much “money printing”, we need to first go back and undertake a decent enough review of the guts maybe even the central focus of the global (euro)dollar system.

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Wait A Minute, The Dollar And The Fed’s Bank Reserves Are Directly Not Inversely Related

2020-07-17

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2020-07-17

One small silver lining to the current situation, while Jay Powell is busily trying to sell you his inflation fantasy, he’s actually undermining it at the very same time. No mere challenge to his own “money printing” fiction, either, the Fed’s Chairman is actively disproving the entire enterprise. While he says what he says, pay close attention instead to what he’s done.

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Why The FOMC Just Embraced The Stock Bubble (and anything else remotely sounding inflationary)

2020-06-14

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2020-06-14

Mainstream Models World Bank
The job, as Jay Powell currently sees it, means building up the S&P 500 as sky high as it can go. The FOMC used to pay lip service to valuations, but now everything is different. He’ll signal to all those fund managers by QE raising bank reserves, leading them on in what they all want to believe is “money printing” (that isn’t).

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There Was Never A Need To Translate ‘Weimar’ Into Japanese

2020-05-17

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2020-05-17

After years of futility, he was sure of the answer. The Bank of Japan had spent the better part of the roaring nineties fighting against itself as much as the bubble which had burst at the outset of the decade. Letting fiscal authorities rule the day, Japan’s central bank had largely sat back introducing what it said was stimulus in the form of lower and lower rates.No, stupid, declared Milton Friedman.

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Everyone Knows The Gov’t Wants A ‘Controlled’ Weimar

2020-05-09

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2020-05-09

There are two parts behind the inflation mongering. The first, noted yesterday, is the Fed’s balance sheet, particularly its supposedly monetary remainder called bank reserves. The central bank is busy doing something, a whole bunch of something, therefore how can it possibly turn out to be anything other than inflationary?The answer: the Federal Reserve is not a central bank, not really.

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2019: The Year of Repo

2020-01-04

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2020-01-04

Fed Balance Sheet: Reserve Balances, 2008-2019
The year 2019 should be remembered as the year of repo. In finance, what happened in September was the most memorable occurrence of the last few years. Rate cuts were a strong contender, the first in over a decade, as was overseas turmoil. Both of those, however, stemmed from the same thing behind repo, a reminder that September’s repo rumble simply punctuated.

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A Repo Deluge…of Necessary Data

2019-12-18

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2019-12-18

US Depository Institutions, 2008-2019
Just in time for more discussions about repo, the Federal Reserve delivers. Not in terms of the repo market, mind you, despite what you hear bandied about in the financial media the Fed doesn’t actually go there. Its repo operations are more RINO’s – repo in name only. No, what the US central bank actually contributes is more helpful data.

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China’s Financial Stability: A Squeeze and a Strangle

2019-11-27

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2019-11-27

PBOC Balance Sheet, 2006-2019
I do get a big kick out of the way Communists over in China announce how they are dealing with their enormous problems especially as they may be getting worse. Each month, for example, the country’s National Bureau of Statistics (NBS) will publish figures on retail sales or industrial production at record lows but in the opening paragraphs the text will be full of praise for how the economy is being handled.

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