Comments by "Curious Crow" (@CuriousCrow-mp4cx) on "Eurodollar University"
channel.
-
And why not, when the banks are still not investing in the real economy? They're Debt-farming for speculation instead of productive investment,pretendinh everything's fine now despite passing on the burden onto taxpayers for their bailout, and impoverishing everyone but themselves? The global financial system was broken in 2008 because the banks and the securitisation industry were too greedy and too corrupt. And the whole global economy has been stagnating and more subject to crashes and volatility ever since, because speculation is quicker and easier, even though it does little for the real economy. And the pandemic just put the frosting on that cake. The only thing that has grown are asset bubbles. So the global economy is a basket case, because the financial sector is far too big, and too unstable to be effective, and it's producing wealth disparities that are undermining national economirs. A little history of finance would tell you how this ends. It doesn't end well. It never has. The irony is we are experiencing the same failures that contributed to the end of the Greek and Roman empires, and for the same reasons. And their financial systems were run in the same way as ours, the only difference being is technology allowed a global financial system to emerge to be rotten from the inside instead of regional ones.
62
-
16
-
13
-
The fact that a closed economy heavily based on exports is buying USD and liquidating their UST holdings when their economic production is not just stagnating but declining, is a clear indication that China is suffering a USD shortage. Why? Because when their economy was growing strongly, they were being paid in USD, and had enough surplus USD to buy USTs. Now they don't. And why? They making far less USD on as their exports fall as the global economy slows, and that also pulls down the value of their internal currency...
It's a simple accounting equation, that any country who isn't the USA in the globalised financial system will have to negotiate, because USD is the major form of international money. And if you're a sovereign nation who needs liquidity - and China needs liquidity because most of its savings are locked up in illiquid assets like real estate and high-risk loans to keep their economic engine going - you have to turn to external sources of liquidity, and that means USD. So liquidating their own UST holdings to get more USD is their only option to get more liquidity.
We know they're is a liquidity shortage from just looking at what statistics it does report, and the news coming out of China. If you ignore all the geopolical-driven sensitivities, and turn to math, it all becomes obvious. China wants to grow economic capacity within, to reduce its reliance on exports, but it still needs imports. And to pay for those they still need to provide USD.
No drama required.
13
-
12
-
11
-
7
-
7
-
7
-
7
-
6
-
6
-
5
-
5
-
5
-
5
-
4
-
4
-
4
-
4
-
4
-
Global Economic History tells a different story. Both gold and silver prices collapsed in Europe because of Supply exceeding demand. Musa Musa collapse the value of gold when he went on pilgrimage to Mecca. He spent or gave away so much gold as he travelled there, it's price fell. Likewise when the Spanish started selling the silver mined in their new Colonies in the Americas in Europe, it collapsed the price of silver. Finance and monetary economics are related, but they are different. Yet, they inform each other, and in this case, economics understanding that supply and demand shifts price applies to currencies based on precious metals as much as fiat currencies. Indeed, why did the reintroduction of the Gold Standard in Britain create an economic crisis in the early 1920's? Why? Because the value of Sterling was set too high against gold, and it did not have enough gold in its reserves to pay for imports, having used it to settle its war debts to the US. This is the reason why that Gold is untenable as the sole form of international money. Nobody wants a world where one has to compete for a limited supply of gold or silver in order to trade for imports. That's was a basis for global wars, and it still would be now. And the idea that precious metals are immune to price changes, which of course, is what inflation and deflation are, is untrue simply because of the effect of demand and supply is impossible to avoid when anything is traded.
4
-
Peron was a fan of Franco, so he was no Marxist. And our universities are not breeding radicals on both left and right, our failing economic system is. And, it's imperfections are known. But, it's the failure of its winners to ameliorate them that is at fault. Humans are imperfect creatures, and what we create has flaws as a consequence of our limitations. But that isn't a problem if those shortcomings are addressed promptly. The fact that we're still discussing Marx's critique in the 21st century, speaks volumes. Our sloth in addressing those shortcomings Marx highlighted, reflects our short-sightedness. Solutions are possible, but currently ignored or kicked down the road, leaving room for the radicals to spring up like weeds. Wealth inequality is Capitalism's kryptonite. Fix that, and the radicals will disappear.
4
-
4
-
4
-
4
-
4
-
3
-
Talking about Marxism and Socialism is identifying the sneeze as the problem, instead of the cold one has. Economics falls into the same trap by focusing on wealth maximisation without considering how it is to distributed amongst those that created the conditions for it to be achieved. By ignoring the fact that such a question exists, economics as predominantly practised, runs out of road as a guiding framework. It's impotence allows room for radical ideologies to take root on both the right and the left. Marxism, communism, socialism on the left, and Fascism on the right, are responses to the now-glaring contradictions and inadequacies of capitalism as practised, which are increasing, as wealth inequality - the failure of adequate distribution of income across the income distribution increases over time. Distribution is the bit of the real world economy modern Economics swerves, leaving populist politics to pick up the ball. That where we are right now. Marc's critique of capitalism is still relevant because it describes its problems. Whether or not Marx's perscriptions for addresing them are helpful, is not the biggest problem. It's whether his critique is valid or not, and that is a moral question. Wealth is fetishized, whilst children go to bed hungry in the wealthiest countries in the world in the 21st century. People are homeless, whilst being employed full-time, and the S & P goes to all time highs. And the more the winners try to persuade everyone everything is fine, the more they give space for radical ideologies. The book "Angrynomics" by Mark Blyth and Eric Lonegan describes the deficit and prescribes solutions that would head off at the pass the growing radicalisation. It's worth a read.
3
-
3
-
The definition of Inflation is the rate of price increases in a defined period, expressed as a percentage. Inflation is a complex phenomenon that can be caused by internal monetary policy, or external supply shocks, or both at the same time. Normally measured in the aggregate by policymakers, the individual experience of inflation will vary according to what goods and services one buys. However, certain goods and services are non-discretionary, and their price inflation is felt directly or indirectly by everyone.
Disinflation is the inability of producers to increase prices because of a persistent decline in consumer demand. Why producers may want to increase prices is either fear or greed. The reason consumer demand can fall is fear.
Deflation is the percentage rate of inflation falling to zero or becoming negative. Deflation only comes when consumers restrict themselves only to necessary non-discretionary spending, and expect prices to fall for discretionary products and services. This normally happens after a period of Disinflation. Accordingly, this reduces margins for producers, who then pursue cost-cutting to survive. As labour is the largest expense for producers, both Deflation and Disinflation increase unemployment.
3
-
So you didn't take note of the job data? Employers in the productive economy comprising of sectors like manufacturing and construction aren't hiring. Not only that, but the Gig Economy is acting as a soak for those laid-off or who have had their hours cut. People are getting 2 or 3 Gig Economy jobs instead of one full time job, which explains the exponential growth in part-time jobs. And furthermore, the growth in new jobs is still within the public sector, and those jobs are being paid for by the remaining Covid reserves, and it's predicted that money will run out in the new year. And remember, those coming across the border are destined for the jobs Americans don't want to do. They're mostly not competing for white collar jobs, or decent paying blue collar jobs. They're accessing the bottom of the ladder. So, isn't it time to acknowledge what large caps corporations said during their first quarter earnings call, when they announced beside their earning that they were planning lay-offs? If they're trimming their workforces, what do you think is happening on the lower rings of the ladder? Hint: hiring freezing, employee hoarding, hours cuts, and the less scrupulous employers are attempting into increase attrition of their workers by cancelling hybrid working arrangements. This is why until recently all the labour market indicators suggested the economy was hot, whilst consumer spending was shrinking fast. If workers who are being laid off, or having their hours cut, they're going to hustle for extra money from the Gig Economy. Or claim unemployment as a last resort, because finding full time work is difficult right now. Hence the contradictory signals of a 'hot' economy with disinflation and swan diving consumer spending at the same time. It's not so much that the Jolts data is misleading. Rather it's reflecting employers are fishing for the best candidates, but not taking the on immediately if at all. And it's the biggest companies doing this. Its very much like t
fine hairline cracks appearing in the economy as a signal worse is to follow. Probably sometime after the election. Things are bad for consumer spending right now, and winter is yet to arrive. Good luck everyone. We're gonna need it.
3
-
3
-
Well it seems that's only true for Bank Credit, which is not to deny its critical importance. But, as Jeff states, the Shadow Banks lend to regulated banks, who then either lend it onwards, or engage in trades, like the Carry Trade, but it's a opaque process, which amplifies the danger involved to the global financial system. As is, collateral and dollar shortages are endemic, so this in turn raises the risk of a systemic failure. The Money Markets are unregulated lenders, and so the risk cannot be quantified by regulators. The regulated banks have been reined in so far, but to date the NBFIs remain free of capital requirements or insurance to cover potential losses. This is why the Yen Carry Trade unwinding sent tremors through the bond market last year. And Repo failures have been increasing in Q3 and Q4 in 2024. No-one knows where or when this UXB will blow. And that would probably finish the current iteration of the global intermediation network, which was patched up but not fixed in 2008. For regulators, the complete repair is regulation of the Non-Bank Financial Institutions like Money Markets. And that might not happen in the current context.
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
3
-
Bears do poop in the woods because they know how, where, and when to get a good meal. In the Stock market? Not really, because the lemmings are buying stocks that are pumped up. Bears go to the options market, and buy puts once they know which firms are swimming naked. This is why the Stock market is the Small Casino and the Options Market is the Big Casino. and lemmings can't afford to go there. And it's the place to make money on the downside, which as the US economy is consumption driven and consumers are being tortured on the rack, there is plenty. I mean, why do you think Trump actually won? Because Harris did not address the elephants in the room, and he exploited voter's discontent. But if he ignores the fact that the cost of his proposed tarrifs would fall on American consumers already anorexic wallets, then the Horseshoe will come flying off, as the GOP will sit back and let him do it. Interesting times.
3
-
3
-
3
-
3