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The Credit Market Funnel
Suppose the U.S. Treasury prints $10 billion in new bills, and the Federal Reserve credits an additional $90 billion in readily liquefiable accounts. At first, it might seem like the economy just received a monetary influx of $100 billion, but that is only a very small percentage of the actual money creation.

This is because of the role of banks and other lending institutions that receive new money. Nearly all of that extra $100 billion enters banking reserves. Banks don't just sit on all of that money, even though the Fed now pays them 0.25% interest to just park the money with the Fed Bank.

? Most of it is loaned out to governments, businesses, and private individuals.

The credit markets have become a funnel for money distribution. However, in a fractional reserve banking system, new loans actually create even more new money. With a legally required reserve ratio of 10%, the new $100 billion in bank reserves could potentially result in a nominal monetary increase of $1 trillion...

and so on, and so forth

How does one determine the value of $1 ... by what it buys in the market place you want to transact in ... and for sure you can buy less and less each day with your $1 .. you can BANK on that...

So the impact for gold pricing? my bet is your $1 will buy less and less gold ...like everything else....

the gnome

1) Why are we just learning about this now - after someone asks? If the data was inconclusive let the market know. Seismic surveys are not magic - the data is interpreted - i.e. expect competing interpretations. THEY MAYBE CCONFUSED IN THEIR REPLY. IF THE DATA QUALITY WAS NOT GOOD THEN THIS IS A FUNDAMENTAL PROBLEM WITH THE CONTRACT AND CONTRACTOR.
Also, what are the reasons the survey was deemed inconclusive? Who did the survey? Are they reputable? If there was an issue on the survey's implementation was a 'redo' requested? These things aren't cheap - how much did it cost?
THE CONTRACTOR WAS REPORTEDLY A GROUP CALLED HISEIS, WHO HAVE SHOT MANY HARD ROCK SEISMIC SURVEYS. THE DATA COULD HOWEVER BE INAPPROPRIATELY PROCESSED. IF THIS IS THE CASE THEN THEY CAN GO TO ANOTHER PROCESSING HOUSE AND GET IT DONE PROPERLY UNDER PROPER SUPERVISION. IF THEY DONT KNOW HOW TO INTERPRET THE RESULTS AND INTERGARTE THEM WITH OTHER DAT SETS, THEN AGAIN THERE ARE A FEW WHP DO GREAT WORK.
https://www.earthdoc.org/content/papers/10.3997/2214-4609.201802731
1b) Considering the questionable nature of the multi-year drilling campaign we apparently got from Batie West - is there a pattern of shoddy hires and projects not being carried out to a satisfactory completion? Who on the BOD is taking responsibility? SHODDY HIRES IS PROBABLY ON THE RIGHT ROAD. THE PAST BOD TOOK LITTLE REPSONSIBILITY OBVIOUSLY.

2) The timeline of when this seismic work was carried out 2018/2019 vs when non-essential capital projects were put on hold mid 2020 does not line up. Obviously the decision to NOT spend the extra $7 million to complete the survey was taken well before Horgan's arrival sometime in 2019. By whom? Andrew Pardey? The former CEO who the BOD said retired without a word of explanation? The former CEO who is far from retired - now in control of multiple gold miners?
THANKS GOODNESS HE HAS RETIRED FROM CENTAMIN. THIS WAS DONE ON HIS WATCH AND HE HAD ULTIMATE RESPONSIBILITY FOR THIS MAJOR EXPENSE ITEM. I AM SURE HE KNOWS NEXT TO NOTHING ABOUT SEISMIC, JUST PROBABLY SEEMED LIKE A GOOD IDEA AT THE TIME, SOLD BY THE SNAKEOIL GUYS.
None of this secrecy bodes well for the company going forward. If we can't trust the current BOD's decision making or their willingness to advise shareholders of money spent on botched projects then we need a new slate of directors. Too many mysteries. To many dropped balls.
THE BOD HAS NO REAL WORLD EXPERIENCE IN EXPLORATION. GIVEN THEY WANT TO HAVE ORGANIC GROWTH THEN THIS IS AN OMISSION, TOO MANY SEAT WARMERS AND GENDER BALANCE.
As it is too many Centamin shareholders accept the BOD's zero accountability - simply shrug their shoulders and bury their heads.

*** I would hope other shareholders would repeat my call to press Centamin to

PART 2
The risk of inflation
In the meantime, if lower interest rates do not lead to business expansion and higher production (and there are good reasons to suppose they may not) then the net result is a larger amount of money circulating in the economy with no new production happening.

This will eventually set off inflationary pressures, which make savers worse off and provide a disincentive for saving. But saving by households is fundamental to making funds available for businesses to borrow.

In the absence of increased production this extra money may also make its way to non-productive financial assets such as equity and houses, setting off speculative bubbles in those markets. HAPPENING NOW

Why might businesses not expand, even with lower interest rates? In deep recessions it is not the lack of credit that holds them back, it is that they cannot sell their goods at prevailing prices. This reduces demand for labour, further reducing demand for goods because more customers are unemployed.

It becomes a vicious cycle of insufficient demand, where the key issue is not credit or liquidity but rather a crisis of CONFIDENCE. Monetary policy loses its teeth at this point, leaving fiscal policy (via deficit financing or tax cuts) as the only option.

It’s all about TRUST ...
However, government borrowing is a long-term game. The entire system, whether deficit financing or printing money, is based on trust — that the government will honour its debt.

Simply put, no government could satisfy all its creditors if they wanted their money back at the same time! But as long as the government keeps making the interest payments on the loans, or at least has the capacity to pay back some of those creditors (sometimes by borrowing even more), the economy remains stable. The juggler’s balls stay in the air.

If for some reason trust in a government goes, watch the balls come crashing down. Any hint of default or not honouring debt obligations will lead to long-term damage to a government’s reputation and its future ability to borrow. No one will want to hold the government’s debt in the form of government bonds.

When that happens, we see capital flight — money flows out of the country as people seek a return elsewhere. The value of the currency goes through the floor, with catastrophic effects on the economy, such as occurred during the Asian financial crisis in 1997.

The economic crisis MANY COUNTRIES is facing is real and deep. Attempting to cancel debt would only reduce trust in the government and risk making the crisis worse.

According to proponents of MMT (modern Money Theory), a country that issues its own currency can never run out and can never become insolvent in its own currency. It can make all payments as they come due. Therefore, there is no risk of defaulting on its debt...

Lots to think about, but what you dont do is take on debt in someone elses paper promises. USA rule book

best
the Gnome

You are into something very interesting. Debt is almost meaningless if it is owed to yourself, in your own currency. Imagine owing yourself $100. What interest, ...etc

So, what does happen when the government wants to spend more than it raises in tax revenue? It needs to borrow money (known as deficit financing), and so instructs the Treasury to issue debt.

There are three major types of debt: treasury bills, treasury notes and treasury bonds.. Treasury bills have the shortest maturity (less than a year) while treasury bonds have maturities of ten years or more. They all must be paid back in the future.

The debt is typically held by banks, institutional investors and managed funds (such as Kiwisaver accounts). Because the government is not expected to default on the loans, the debt is considered to be secure. So, these bonds can typically be issued at lower interest rates than bonds from other financial entities.

Where government debt goes
When the Res BANK engages in “quantitative easing” it essentially buys up these government issued bonds. To do this, it prints currency to pay for the bonds and this currency goes into circulation, increasing the money supply.

Quantitative easing floods the system with liquidity — the amount of money readily available for investment and spending. In turn, this should put downward pressure on interest rates because money is cheaper to borrow when there is more of it.

The Reserve/Central Bank can also lower the official cash rate (OCR) to push retail interest rates (on mortgages and savings deposits) down. The aim in both cases is to make borrowing cheaper in the hope that businesses will borrow money to invest, in turn creating more jobs.

If the RES BANK is buying government bonds from the banks and investors who had bought them earlier, it follows that the creditors have been paid off. So why can’t the government simply write off this debt?

Firstly, this takes away the RES BANKs ability to act as an independent entity, which in itself is problematic. But even so, the debt does not disappear, it just takes the form of that additional amount of money floating around the economy.

At some point this extra money will end up being deposited in commercial banks and be held as reserves which earn interest from the RES BANK.

The currency in circulation is also legal tender backed by the authority of the government. If no one else wants to accept it, holders of this money should be able to sell it back to the RES BANK for something of value in return (US dollars, say).

One way or another, sooner or later the debt will have to be honoured....END OF PART 1

Torn,

The Fed is not alone, and in fact the Central Banks are working toegther, and have been for sometime. They consistently put on some ideological glasses, filter out the results which do not support their ideology, and keep moving forward. Well you can do that for so long, before reality starts to take a grip, and reality is now about to hold sway. To describe the Fed as being inept is a mild understatement, which I have said beofe, and will shut up about. Over to someone else ....

Tesla is a poster child for Powell’s big problem...

It’s hard to escape the sense that whatever the Fed does, more volatility and likely more pain is on the way for investors in 2022.
Just two hours after Federal Reserve chairman Jerome Powell finished his extraordinary press conference, it was the turn of another man who moves markets to take centre stage (and how is genuinely in the market with genine real knowledge of the market - that does not mean I believe every utterance?)): Tesla founder and chief executive Elon Musk.
Powell left markets worried that the Fed might have to hike interest rates faster, harder and higher than THEY anticipated to tame inflation, which Powell now believes could be worse than the central bank expected.
But Musk had a more upbeat message for investors after a cracking year.
Tesla’s December quarter revenue of $US17.7 billion ($24.91 billion) beat consensus estimates of $17.1 billion, with earnings per share of $US2.54 about 7.6 per cent above analyst predictions.
The electric vehicle giant exited calendar 2021 with gross profit margin on its automotive operations of 30.6 per cent, easily the best in the global car industry and well ahead of the 24.1 per cent margin it started 2021 with.
The results capped off a year in which Tesla increased car sales by a staggering 90 per cent and delivered a net profit of $US5.5 billion.
“I think it makes us a real company at this point,” Musk told investors on a typically rambling analyst call. “This is a critical-mass company.”

SO WHO DO YOU BELIEVE, A GROUP OF ISOLATED IDEOLOGUES BURIED IN THEIR FILTERED STAISTICS, OR ... THE MARKET PLACE.

I KNOW WHERE MY MONEY IS, AND IT IS NOT IN THE FIAT, AND NOT BELIEVING THE FED OR CENTRAL BANKERS ...

AND THE CLOWNS DOWNUNDER. THREE LIKELY OUTCOMES
three potential outcomes from the bank’s February board meeting scheduled for Tuesday....
First, tapering the $4 billion weekly bond purchases and terminating the program in May.

Second, tapering the program but with a review in May

And third, terminating the program altogether from February.

LOL, but sadly
They know not what they do (are doing)
the gnome

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