Member Info for MontyMcgree

Jerry, people are intelligent, successful and knowledgeable about some subjects (or maybe even a lot of subjects), but that doesn't mean they know how everything works

Willem Middelkoop, Albert Einstein or Stephen Hawking could have said what Willem said in that video and I would still say they were wrong, its not personal, it doesn't discount their achievements, its not to elevate myself

A spade is a spade, dont shoot the messenger

Discuss with me why he is right, or better yet go find out why is is wrong.

From this interview its clear Willem Middelkoop has no idea about how the monetary system works.

"Time to buckle up and brace for serious volatility."

Agree, but nothing to do with GGP specifically, since ~April the dollar has been on a tear and gold, spx , crypto etc all sliding (some more than others)

TomE I think I summed up my thoughts with my original response

"Dollars looking good, markets looking red."

And everything since has been an expansion on that point

MkivSupra, theyre talking about collateral, theyre talking about the ability to go into the repo market and get an overnight loan

If 100 trillion dollars exists but only at one bank that doesnt want to lend, then theres not enough money in the world

Sorry TomE :-) to have one interesting thread away from the spammed other topics

Lets get back to

SP is going down??

Clear manipulation??

Gold is going up/down??

I would argue that the topic that has been discussed is important to all of the above, and everything in general though

:-))))))))

"The same people that created, legislate and operate this system have Gold as a backup"

MkivSupra, as I said above, the world runs on the Eurodollar & repo market, a system created offshore away from the US after WW2, a system that grew organically outside of regulation

This is from a recent episode of Eurodollar University with Jeff Snider

"Big Picture: there are many different forms of money, just like in your wallet you might have pennies and quarters, debit cards and credit cards, the Federal Reserve is central to the pennies, to bank reserves, but guess what the rest of the global economy functions on a much higher, flexible kind of money, the credit cards we all have, collateral. So when were saying there's not enough collateral that's another way of saying there's not enough money. Collateral is a kind of money.

The Federal reserve back in 2017 looking at this very same dynamic when the treasury bill rate was less than reserve repo, the quote was something like "treasury bills are superior to bank reserves as a monetary form" and that is exactly the truth, bank reserves have a very narrow limited scope in use whereas collateral is essentially the life blood of the entire modern system"

Whose in charge of bank reserves? the Fed, and who is in charge of financial collateral, this esoteric money? nobody, the system. "

RE: Mike Maloney video

If it works how he says..

I have $100

I buy a treasury for $100, I now have $0 and 1 treasury

I swap my treasury with the Fed for 100 in bank reserves which they created out of thin air

I take my 100 bank reserve, spend it on a treasury, I now have 0 reserve again but I am holding a treasury

The Fed again swap me 100 in bank reserves for that treasury. So the Fed now have 2 treasuries, the government has $200, and I have 100 in bank reserves

If in reality this is happening why does the level of bank reserves held at the fed ever rise? during QE they should be being spent on treasuries, reimbursed again, flat.

The first Western QE swapped "toxic" MBS for treasuries and bank reserves, that helped fix balance sheets, made a lot of sense; as best I can remember the Fed actually ending up making 100+ billion from the MBS they received

But subsequent QE and the purpose.. good question

Apparently QE lowers interest rates but I have seen a report by the Reserve Bank of NZ which estimated it has a negligible effect (cant find it now sorry)

Interests rates were already on the floor when the Fed started QE in 2020, the Fed follow and act like they lead, QE seems more about PR "hey guys were going to be *printing money* better go out there and spend yours before we inflate it all ;) wink wink"

RE: m1 and m2

They seem to have updated m1 to m1sl https://fred.stlouisfed.org/series/M1SL

Alan Greenspan said in 1993 that m2 wasn't a good indicator of anything any longer

“At one time, M2 was useful both to guide Federal Reserve policy and to communicate the thrust of monetary policy to others…The so-called P-star model, developed in the late 1980s, embodied a long-run relationship between M2 and prices that could anchor policy over extended periods of time. But that long-run relationship also seems to have broken down with the persistent rise in M2 velocity…"

There are lots of articles about the Ms

https://alhambrapartners.com/2021/11/15/is-m2-the-money-behind-inflation-if-not-what-is-or-isnt/

https://fedguy.com/the-mechanics-of-quantitative-easing-and-m2/

"The FED produces bank reserves from thin air and it is treated as an asset to swap for treasuries. The swapper then has those $s to spend, is that not the same as "printing" $s?"d
https://alhambrapartners.com/2020/09/21/ok-bank-reserves-lets-do-this-one-more-time/

I am a bank with $100

The US government wants to sell a treasury for $100

I, the bank buy it for $100

The Fed then create 100 in bank reserves and swap it for my treasury

So I the bank started with $100 and have ended up with 100 equivalent is bank reserves

Bank reserves can never leave the balance sheet of the Fed, they can do some limited stuff with them discussed here - https://fedguy.com/can-banks-spend-their-reserves/ but remember they started out with $100 to begin with and still only have 100 in bank reserves

", it'll be just another indication that our sp is being manipulated!"

A very underdiscussed topic

Bancal, from the repo market

The repo market is just where global financial institutions lend to one another, usually in overnight agreements, but these overnight agreements can continuously roll over

Originally offshore dollars came to Europe after WW2 with the Marshall Plan where the US gave Europe dollars to rebuild

Speedy, dollars flow into China through trade, when they have an excess they turn them into treasuries, when theres not enough dollars arriving they have to sell treasuries . This is why you see the steady rise until the financial crisis - https://imgur.com/gGPVRof.png

China is not making any kind of political statement when they sell US debt they just need the dollars

As I am sure you know currency is debt, so debt needs to expand at a certain increasing pace to be able to service the old debt and still have currency flowing around.

A basic overview of the repo market (this is extremely simplified):

I am a bank, I need to hold reserves to balance my books, I can hold cash, treasuries, bank reserves and other stuff depending on regulations and how its rated

Cash and banks reserves are illiquid, i have to sit on them for them to act as the reserve which ties my hands. Treasuries however I can take to the repo market and off-book & offshore swap them for cash in an overnight agreement paying a very small haircut. This is a riskless loan for the other party lending me the cash because If I dont repay the loan they have a the treasury. Offshore non-domestic US held dollars are called eurodollars, you wont see these in the Fed figures.

Now on book I have treasuries worth x amount, meanwhile off-book in the cayman islands im actually sitting on x amounts of dollars to play around with, so really I have double the amount of money I would have had otherwise if I just had cash tied to being reserves

You see how nice that is and why you would want treasuries?

Pre 2007/8 MBS served the exact same purpose as treasuries, balanced the books, swap it for cash in the repo market, this created a lot of new money to play around with, then the financial crisis happened and MBS turned from as good as treasuries to no one wanted them, a large destruction of liquidity

So if we had a massive rise in currency pre 2007/8 because of MBS and now that is tool is gone, how can currency creation keep pace with pre 2008? it cant and didnt, so its ultimately deflationary,

ps. the Fed dont print money to make up for it, despite the myth and memes the Fed cannot create new dollars, they do QE and create **bank reserves** (not dollars) which are an asset swap for treasuries, nothing new is created

Speedy, I feel what you seem to focus on is money as a store of value, so yes currency is poor at that no doubt, but currency as a tool works very well

What I am suggesting is learn about the dollar and US treasuries and their use as a tool in the global financial system

Why wouldnt you want to do that?

vital to* I need to check my posts before I press enter

Matty, no I like gold just for different reasons than most gold bugs, deflationary reasons

My problem is more people dismissing the dollar or US treasuries when they're vital the how the world currently works

Im surprised no one has suggested having HAD005 on it

Speedy, I did the majority of my gold buying between 2014-2018, fortunately for me that was a good time (luck rather than judgement)

You will have to trust me but I know everything you know, I know all about gold bug ideology and beliefs, I was right there with you until March 2020 when I actually took the time to learn how to world really works

Can you do what I did? challenge your beliefs and learn about the eurodollar system and repo market?

There is a Japanese (or Chinese?) proverb: The frog in the well knows nothing of the sea

Climb out of the golden well brother

Dollars looking good, markets looking red.

Thank you as ever Dip and thanks for the interview Bottle

If you care to look at what commercial banks are holding in the US, a record 1.7 trillion isnt being "shunned"

https://fred.stlouisfed.org/series/TNMACBW027SBOG

Also treasuries being borrowed from the FED in overnight agreements just hit two trillion

https://fred.stlouisfed.org/series/RRPONTSYD

This is just whats reported by US commercial banks, never mind globally

But yeah no one wants them hey, even though the world runs on them.