Everyone thinks the Fed prints endless money. So why does the world keep running short of dollars? Because what the Fed actually creates is not the money the world uses. It creates bank reserves. Those are not real money. They are limited-use tokens that only work inside the interbank... system. The dollars that move the world are private bank money, created when commercial banks lend. Ledger entries on JP Morgan, on Deutsche Bank. That is the disconnect. The Fed can flood the system with reserves, but if banks will not lend, no real money reaches the economy. That was the entire 2010s. Everyone saw the reserves and screamed inflation, dollar to zero. The opposite happened, because the banks stayed constrained. So a dollar shortage has almost nothing to do with the Fed. It is about whether banks are willing to move. And right now, they are not.show more

Printing money and giving it to banks so they could pad their reserves was inflationary, because it meant banks didn't need to liquidate assets, e.g. delinquent property, to stay solvent. Therefore it locked it prior inflation from previous credit expansion.

Yep but Central Banks have the power to *indirectly* *direct* lending - so it does in fact have something to do with the Fed See world renowned economist credited with the creation of QE, Dr. Richard Werner's book "Princes of The Yen" where he documents exactly this dynamic.

The Fed converted reserves into deposits in 2020's QE by buying assets from non-banks in a pass through scheme with its member banks. Suggested to them by who else but the evil little Fink Fairy who rested on Powell's shoulder at Jackson Hole in 2019.

The Federal Reserve and its member banks have always been the beneficiaries of our financial system. American citizens get the leftovers.

In layman's terms it's known as Financialization. Splitting the ECONOMY into two economies, with the general economy being actual production and financialization being the economy of paper. It's why everything is measured now by stock prices, and not actual production.

Snyder has the facts completely backwards. Dollar shortage is when nobody wants to buy (with reserves) the assets (stocks , bonds) for sale. Right now, Qatar wants to liquidate USG bonds to get reserves to buy food or whatever. Hence Fed swap lines to stop fire sale.og USG bonds

Jeff, Ya gotta explain how this works in simple terms for the uninitiated. It creates bank reserves. Those are not real money. They are limited-use tokens that only work inside the interbank system.

But the stock market will go even higher.

I was just comparing the current over allocation of capital by private credit to AI to a similar over allocation by trust companies to railroads prior to 1907. We'll see how it plays out this time around.

Don’t forget to mention government deficits.

That is why the term "Banksters" applies. It is a system that includes the FED, the larger banks that are both part of the larger system but profit from it from each transaction. They are the epitomy of the Cantillon Effect.

Jeffs followers all owned treasuries before they got cut in half 🤣

there are a ton of sterilized dollars, and the Fed creates credit EFFR policy guidance and interest rates equals REPO. then the great offshoring of dollars in 2008. print dollars to replace the missing dollars, you have more dollars. dollars obviously copped off a bad loan(s)

The money system is more than just endogenous money. The Fed is just an agent of Treasury.

This is the bit that bitcoiners struggle with. Central bank digital currency has very serious implications if you remove or bypass the natural restraint of commercial banks.

No. The fed prints currency as it takes treasury as collateral.

But issuance of federal debt does create something that can be use the same as money and a bank can buy it with bank reserves right????

@xclugny @BrunoBertez C'est ce que disait à partir de 2011 Jacques Généreux, le conseiller économique du Parti de Gauche de Mélenchon à l'époque. Dommage que merluche a abandonné son combat contre la finance apatride des Suprêmes Roublards pour bifurquer vers leur escrologie

If you want to see The Four Economic Regimes, and How to Position Your Portfolio for Each One, sign up here 👇

This same thing happened during the Sovereign debt crisis in Europe in 2011. You can flood banks w/ liquidity but if the underlying economy is in shambles the banks aren't necessarily going to just start lending. You can lead a horse to water but you can't make it drink

Been there before

Ponzi shell game of counterfeiting and calling it "monetary policy".

The more reserves they create out of perpetual debt machines created by governments, the more commercial banks have to lend against. The trick is where they buy toxic shit from banks 🏦 non performing loans NPLs and a smattering of other illiquid bad ideas that banks offload.

What happened to you Jeff. You look homeless?

It’s just fraud , stop Pretending it’s not you insufferable fucking academic drone.

Inflation happens when too many dollars (or euros, etc.) chase too few goods and services. Nothing more; nothing less. We have inflation in the U.S. Ergo, there are more than enough dollars sloshing around the system. The end.

Sounds like the only thing the Fed can pump up by this process is banks.

@maneco1964

Banks not lending is the problem, not reserves. duh. track your real assets.