>>61247211Why can’t we hurry up and have a liquidity crisis? They can drag this out for a year at least
>>61247211Can you explain what this is for the retarded?
>>61247247The fed has a window set up for banks to trade treasuries and other assets for cash. If a bank doesn’t have enough cash to cover their overnight liabilities then they can trade those treasuries at the window. This keeps the banks from going insolvent and defaulting. For the past few years no one has used this window because the banks have had excess cash. But now, a few banks have run out of cash and have to trade their treasuries for cash.This dance can go on for quite a while before anything serious happens. So two more weeks and the world ends.
>>61247247The chart is showing that banks are borrowing money from the Fed for the first time in five years and the last time they did that the wheels were coming off the financial system but they were able to patch it all up for years by printing trillions of dollars and saying it was due to the pandemic. For the last 4 years banks were flush with cash, now they’re tapped out. More regional banks are starting to fail.
>>61247286>>61247299Better explanation than I was typing out. Do you see this as the same setup as 2019? Not sure what to make of it. I’m thinking of this from the perspective of an investor/speculator but also as someone in logistics and trucking. Rates on the lanes I watch are falling even with the exodus of foreign CDL holders and general enforcement of standards deleting many carriers
>>61247286Can they keep borrowing forever? Surely the all the banks cant go insolvent. Right?
>>61247247Money printer goes brrrrrrrrrrrrrr.
>>61247351These cunts say that the money printer has stopped, but is getting greased
>>61247211Top-Signal status?
>>61247247It means if you thought your alts were fucked now just wait, they're about to feature in a jewish interracial non-consent /gif/ thread
>>61247339Don’t know about the trucking industry but demand in general seems low. Look at the price of oil.Yes very similar to 2019 but the fallout of that was never allowed to spread. Now I think we’re going to see the effects of a liquidity crisis and credit contraction before they can patch it up again. Fed will be too slow to react and then overreact like they always do. My suggestion is to stack cash and be ready to buy the dips. It’s going to be the same inflation play as 2020/21.
>>61247371Well, what about the Genius Law ahead. In 2028 banks will be able to print as many stablecoins as they want. This should be so fucking bullish we could be green wojacking this shit for months.So there is a buying opportunity ahead or is it really over?
Nothingburger. Before Covid the Fed had to actively establish open market operations to support repo. As of 2021 it made these OMO’s an established part of the market to support the federal funds rate, we’ve just been wayyyyy too inflationary since then and have not gotten to see it used. For the majority of market history regular repos and low liquidity have been the standard, which is healthy because it means there’s demand to borrow.
>>61247381Yeah by all means things will be bullish in 3 years.
>>61247394If i understand this shit correctly, the market should be 'discounting' the green days of the future. But probably two years ahead is too much.
>>61247350Only the big banks will be OK. A lot of smaller ones will get bought by them for pennies on the dollar. The big banks are probably healthy enough to absorb their bad debt and ride this all out. Depositors in whole should be OK; if their regional bank fails it gets bought by another larger one. The biggest domino to fall would be widespread mortgage defaults. I’m not sure how much of an issue that can become in the next year or two but don’t think it’ll be anything like GFC. This credit contraction that’s beginning to happen is fueled by auto loan defaults, credit card defaults, missed student loan payments etc.
>>61247412Being years early is basically being wrong, you live about 85 years so waiting 5 years for a profit is a pretty big waste of time for people in markets for a living.
>>61247382If you don’t believe me as well just go look up a history of LIBOR to fed rates. It’s pretty much always above the federal funds rate “upper bound” because that’s a healthy place for the overnight rate to be.
>>61247372I can kind of understand the math behind this, but I’m not sure how to apply it to things outside of financial markets.If you had some kind of physical business would you cash out some of your brokerage account and hold off on buying equipment in hopes of a crash?Personally I’m seeing demand in industrial goods only slightly down, very little of what has happened with tariffs and austerity has had a noticeable impact. Anything consumer related has been in a slow decline for the last 3 years. For people that just do dry vans it bad times, even if they don’t see it because they don’t notice their expenses slowly rising. A lot of trucks are basically driving around breaking even.My hypothesis for liberation day was that we would see a general supply chain snarl and container shortage even if the actual tariffs amounted to nothing. None of that was even noticeable.
>>61247475The fact that the fed has started lowering rates, and stated they’re ending QT tells me that something is brewing.A few banks just failed and more banks will be allowed to fail to scare the market into pleading for QE5. But the when is anyone’s guess.
>>61247514The bull case for QE that people have never understood is that the U.S. demand for productive debt can absolutely outstrip the ability of the world economy to supply that debt. I think the market believes it can’t survive outside of an ultra inflationary environment anymore but I think it’s wrong.
>>61247497I’d say asset deflation while consumer prices hold steady or continue to rise is what we’ll see. Again it should be fairly short-lived as they’ll fire up the money printer again. Yeah have some cash in your brokerage available. New equipment isnt going to go down but the used market could see a crash.
>>61247549The AI monster is going to suck up every dollar we can dream into existence. And the fed is doing its part to convince people to dream up a lot of dollars. I think you’re right that the economy ‘could’ survive in a low inflation environment, but those at the helm won’t let it. Look at what’s happening, they’re deliberately throttling liquidity to convince the market we need more.
>>61247620I agree with your AI thesis, or at minimum if not AI some other bubble will gladly take its place.>they're deliberately throttling liquidityWhat do you mean? Funding is ample and available, QT is subsiding, arrayed have been cut, where is liquidity being throttled?
>>61247211Man why is this shit legal? If any other business on earth hits a liquidity or cash flow issue they're shit out of luck. But when one particular "Systemically Important" business has that issue, well...
>>61247798Clearly you have zero idea what the corporate paper market looks like.
>>61247937How much of the commercial paper market does the Fed own? I promise it's small.
>>61247759I misspoke there. The fed isn’t really throttling liquidity, but it knows the banks made terrible plays with their loans. The fed is waiting for more of them to go belly up before dropping rates to 0% and launch QE5. I think we’re gonna get a covid style flash crash to induce it.
>>61248008You need to read up on your market structure little bro. The standing repo facility exists to bolster overnight lending, of which CP is a large participant. They can’t directly buy it, unless there’s a global pandemic apparently and the illegal purchase of corporate debt through a SPV goes unpunished.>>61248048I disagree, I don’t think the Fed gives a shit about regional banks basically.
>>61248219You think all the regional banks fail and get folded into the primary dealers?
>>61248249I do yes, it to my knowledge has happened many times already. I don’t think regional bank defaults have any solid connection to any sort of weakness in the broad economy or any GSIB. Look at SVB.
>>61247475>look up LIBOR>it was phased out of use because it was manipulated by the banksbruh
>>61249350Wait until you read about SOFR. It's practically the same thing with a new coat of paint.
>>61249350Bruh what. LIBOR was the overnight rate before that happened, and has the longest history of overnight rate spread data for us to pull from.
>>61249755LIBOR rates were manipulated because it was literally some guy sitting at a dept and throwing a number out there that sounded agreeable. They'd even tweak the numbers slightly and then make inside trades based on the half percent number fudging.
>>612501171. It was like 24 guys sitting at desks deciding on financing rates2. The rates were not manipulated a half percent, there’s plenty of papers around about the impact and the numbers have in my head is 7 bps of impact on some days. 3. There’s plenty of data out there on the correlation between LIBOR and secured lendingI’m not sure entirely what your argument is here. We can’t use overnight rates prior to 2012 because LIBOR was manipulated? We assume liquidity crunches never happened prior to 2012 because of this? This seems like a very silly argument, given it’s provably very false.
>>61250180do you believe there is a liquidity crisis unfolding now or about to unfold?And can you explain your thesis about what is about to happen with the crypto, equity, and us treasury market
>>61250349No I do not, I think the standing repo facility getting volume indicates nothing currently except a return to normal from an extreme period of hyperinflation. The market may feel it cannot survive outside such an environment but it definitely can. Crypto and equities will decline and be up only 3-4% on the year due to macroeconomic conditions such as tariffs and lower consumer spending, bonds will continue to go up on news of cuts and the curve will continue to steepen, and overall we will get a more tepid market with no giant liquidity crunches or explosions. At least until Jerome’s mandate is over, who knows after the new Fed head is picked. Again the majority of history the market has functioned cash strapped, people seem to be forgetting that’s normal and liquidity bazookas are only the new normal.
>>61248281wish i saved that chart which showed number of banks in the US over time. eventually it all falls to 1 bank, the federal reserve.
>>61250414>>61250349This cunt think liquidity is going caput with maybe another financial crisis coming.
>>61247514Yeah. Fear of counter part risk is returning. They pushed all this dodgy subprime lending into the so called shadow banking system. But it’s still the banking system lending to these unregulated lenders. They basically couldn’t give up the derivatives drug. So they found a loophole. But there are so many loans been given to companies individuals whatever that only work in a situation where rates and liquidity is rock bottom. Calling the time is always hard. But it’s closer than it’s further. Hold onto your asses with portfolios. Will be tough to hold with 30% downswing upswings.Next year is going to be white knuckle stuff I feel. Opportunity yes. But you can forget about line just go up. TLDR. You can’t just keep your foot on the accelerator for 30 years. Eventually the engine breaks. And repairs (return to productive capital allocation and pricing) become necessary. Will shake out the jeets and quick buck merchants.
>>61250570Depends on your view of capitalism I think on how this should play out really >>61250644You should link the article. Would love to read. I think he’s wrong at the moment, but certainly funding stress will lead to funding collapse over a long enough period, even if that’s the default state of markets.
>>61247620AI is great. I use it. We all use it. But you have to ask yourself. Is it wise to be the the bloody family home on it? You know we had economics finance wealth before any of this turned up. What? Five fucking years ago. Just looks like mania to me. But I’m old now. I have some time perspective on things now.
>>61247798Socialise losses. Privatisation of profits. Why do you think the wealth gap is becoming so fucking ridiculous. These people are that clever. Just insiders. Closer to the money spigot than you.
>>61247299so we dump first, they cut rates and then we pump on money printing rally again?
>>61250704It’s called a melt up. Or crack up boom. Basically be anywhere but paper. That’s for the workers. Sad really.
>>61247798fiat paper is a scamliterally the biggest scam (((humanity))) ever inventedits literally worth nothing
>>61250712if there is FUD first why wouldn't crash? in this case people holding cash would winall previous crashes since 00's had a fast lower of ratesi believe unemployment will go up and they will panic cut, then we crash and then we pump later on
>>61250731People holding vast amounts of cash who know when to swoop as the correction hits yes. But most people are living day to day. Why do you think Berkshire is holding hundreds of billions in cash. They know what’s coming because they’ve done it before. It’s telling you something. They know things are going to become a great deal cheaper. And big cash on hand and being fast and very integrated to the system means. Ching ching time.
im an high school dropout but explain how this can be bullish for risk assetsi drew this on paint myself a few years ago, basically predicting the bubble into the ffr raises, then the longest we stayed with a high interest rates (in modern times i think 4+% is high and is cooking already a lot of people) then the harder this debt will hit them as their debt interest rate gets updated (it appears there is a lag of a number of months) so as this debt gets updated, they start getting hit by all these ffr raises, and at some point something breaks, and we see unemployment, and jpow's mandate is to keep unemployment low and inflation low, which is a contradiction and is like trying to do a backflip on a motorcycle type shit, meaning that this is difficult to balance, and when unemployment goes up they will paniccut to try to make unemployment go low again, and this will create the market crash cause people see this as a raction of a recesstion, and the market crashes and all this people that think lowering interest rates is great are holding their bags all the way down while cash bagholders are the ones that will win as they get to buy cheap and will ride the next v curve because jpow cant also let people's retirements (basically, the sp500) go too low without civil unrest, so here we go again with another rally, and buying low is key so those that wait with cash will buy low, and so here we go again with this cycle where we end up again with inflation from the interest rates being too low, so they raise rates, and repeat
>>61250676There are recent interviews on youtube.Essentially he is saying that any QE from now on will be directed to get money into the real economy and not into financial markets. I dont know how that works.And he also explains his usual SOFR spreads spiking up, global liquidity peaking, liquidity cycle ending, bearish for 2026, crypto going down because risk apetite is down along with liquidity, etc
>>61247286It's not running out of cash it's running out of anything to buy that isn't repos
>>61250805>not into financial markets. Look. That’s the medicine. Bit I’m afraid we’ve passed the sickness stage and we into the addiction phase. The amount of national and societal cohesion and sacrificial “let’s do it for the nation” sentiment focus necessary for that just doesn’t exist in the elite class. They are gone. Way gone. That’s why the WEALTH GAP is becoming a politically revolutionary issue. Wish it was different. But that’s the Achilles heel of capitalism and democratic systems. Corruption concentrates cronyism and wealth and power. The free market is dead. Just admit it.
>>61250809Is the Tga sucking up liquidity because they cant spend right now because they are closed?
>>61250805I’ll look it up, sounds interesting. I’ll post the chart too we had from the other thread, I just don’t think we’re anywhere close to a top but certainly open to learning what I’ve missed.>>61250809This chart is key to this discussion yep anon, good post. There’s nothing to sell for cash so it makes sense to eat 4.3% rates to buy whatever you’re buying.
>>61250887Whoops forgot chart
>>61247211there is infinite cash at the fed. its not possible for anything to break
>>61251012That doesnt mean that you can flood the world with infinite money from one day to the next.
>>61251012So why don’t they just print one piece of paper. One treasury note. With a face value of 40 trillion. And wipe their debt. If it’s that simple. Why not? I’ll explain it you wish.
>>61251012>its not possible for anything to breakbecause its all inflation anyway
>>61251076Possibly that’s a hint that’s it not actually money. It’s a paper IOU. And money is hard. Goods, land, commodities, divendent paying stock, gold, silver. Etc etc.
>>61251076thats exactly how it works and how its been working.>>61251092why would they wipe the debt? debt is control
>>61250887He is all about the study of liquidity. In particular the debt/liquidity ratio to determine if assets will gongo up or down.
>>61251139Debt is control. Tell that to Trump who went cap in hand to the Chinese last week and got a fucking lesson. What wasn’t mentioned was that they were begging the Chinese to resume purchases of US debt aka treasuries. The answer was a big fat no. And that’s the other ace up their sleeve. They’ve 100s of billions of US debt they can dump. Not without cost but with devastating effects. Why are you getting it. How about this. Okay the us prints another 40 trillion in paper. Who’s buying? Who’s sending all actual finished good now. For paper plus a poxy fucking 4% extra while they hold the promise. When it your take the CPI calculation from just 20 years ago. Inflation is over 8% per year. Minimum. Do you think these people are stupid? They know this paper in calm conditions is losing money. And when the crunch comes it will probably be worthless. Will I tell you how they know? The 300 billion that was stolen from Russia wasn’t actual money. It was dollar debt. They just froze the payments. The Russias knew they could say goodbye to that actual money they lent (hard goods see above) the moment they launched the war. And the rest of the world woke up and saw these IOUs were just what was on the paper. It says it on the. A note to pay. Not a guarantee. Not legally enforceable. Actually illegally reneged upon. That’s why we are in this desperate mess. So go ahead. Print the 40 trillion note. Zimbabwe had them too. How did that do for them. Eventually you will get it. Paper isn’t money. It’s a promise. But at 100% GDP and a lot more. Any fool can see you may wipe your arse with such promises. It’s a write off.
>>61251196enjoy the show
>>61251236Palpitations before the stroke.
>>61251196They'll restart QE and devalue the USD which Trump wants anyway for his goal of making US manufacturing more competitive
>>61251167one. nothing wrong with me..
>>61251103Assuming gold is more or less a "stable" value (not the cleanest assumption, I know), this past year was actually a pretty major crash, camouflaged by hyperinflation, wasn't it?And considering where hyperinflation goes, was that the good outcome instead of going straight to Zimbabwe, or is it still unsalvageable?
>>61251236>>61251247So the market is going to nuke? Another financial crisis coming soon?
>>61251248Agreed. But with 40 million on food assistance. How the hell will the American working man survive another 50% devaluation of his labour. Given how indebted he is on a personal and national level. You can’t have it both ways. QE is printing. Printing is debasement of labour. What’s next. 200 million dependent on food stamps. This is recipe for revolution not fucking de industrialisation. An all the while. We get richer. Because we know the game. Get out of paper. Get into money. Any type. Because it’s appreciating faster that paper isn’t depreciating. That’s what you are doing when you chase pumps. Do you get it? Just remember. I like money too. But living in a country where it’s not safe to have it when everyone else doesn’t. Is an entirely new and unwanted problem. Think about it.
>>61251279no, nothing will happen. quality of life will continue to decline and no one will do anything about it
>>61251279They can’t just re inflate this time. Once they reneged on the Russian money owed. It was curtains. Who’s buying now. But the Fed. Yield control and monetisation. Gold up. Stocks up. Melt up. Crypto up. Paper down. The dollar will be last man standing maybe. But the winner will be the players with gold and industrial bases and military capacity. Old school rules. Plenty of opertunity to make money on the way. But you have to be aware it the monetary system and what money actually really is.
>>61251272I think the whole monetary system is fake and gayand people are catching up to itwe dont have hyperinflation, yet
>>61251284It's gonna look like 90s Russia imoBlackrock and co. as the new oligarchs buying everything upMafias everywhere
>>61251284Oh yeah and reverting to barter
>>61251167Im about halfway through the video I think you’re talking about. It is good stuff for sure. I still disagree with him as I think he is relying heavily on excess reserves as a metric of liquidity when I don’t think that’s taking into account how reserves and repo functions with the treasury market, which is weird because he does note changes to stress testing for the banks changing their reserves. But this is good analysis overall, and I think he has a valid argument.
>>61251365two. nothing wrong with me...
>>61247759Then why are financial institutions paying above market rate to borrow money???
>>61251592>above market rateThe market sets the rate, the question causing the standing repo facility to have volume is why is the market rate above the feds upper corridor. I answered that in my initial post, it’s normal market functioning to have the overnight rate fluctuate above the feds upper corridor. Every time it does so does not mean it’s the end of the world with imminent liquidity issues, despite it probably feeling like that to the market participants denied their usual ample liquidity, and they will probably survive this with no major hardships.
gonna rewatch killing them softly again to celebrate recession kino is so comfy
>>61251714So this was the norm when, 1990s?
>>61251714what initial postthis is your first post, you confused Fed shill
GameStop
>>61250799someone?i think like im right but at the same i think this may be frontronned and we just have a small dip and then moon and high iq fags continue to be sidelined
>>61251719See below for the chart already posted. Normal for anytime where repo volume has been dominate, which is the majority of market history proceeding COVID, I will find the FRED chart to show you in about 45-60 mins how majority of the market history repo has been positive, not negative aka “reverse repo” operations>>61250896>>61251725Why do idiots always turn to ID’s.
>>61251318>Who’s buying now.The Cayman islands and stablecoin banks
>>61252092Hmm looks like mostly pre-GFC, I may be misremembering the volume of repo post 2008. Given this I think there’s a distinct possibility we’ve shifted to an enviroment of banks lending short and borrowing long term post 2008. I may have to rethink my argument, but certainly this gives me more data points to go looking for.
>>61251284Deportations and immigration control. Right now the American working man pays to support a lot of non-Americans.
>>61251139>>61251196It is a total boomer midwit take to anthropomorphize the US debt and think of it as analogous to an individual being in debt (which is often bad), when a better analogy would be to think of a family in a neighborhood, the family is the wealthiest family in the neighborhood by far and has the largest income relative to all other families in the neighborhood. Now for simplicity let's say the family makes $100000 per year. Now over the years the family has been borrowing money and going into debt, let's say they are $100000 in debt. Here's the reason that they are not really in trouble; they have been borrowing from themselves almost exclusively. For example, they needed $10000 for last year's vacation, well the oldest child "lent" 90% of those funds to the family and the family pays him back interest and principle over the next 10 years let's say, totally manageable. Only $1000 needed to be borrowed from neighbors, and most of that was borrowed from their long time good friends who are also among the richest families in the neighborhood (these would be analogous to our allies like Japan and others). Only a few hundred dollars were borrowed from a couple families who are assholes and no one really likes (this would be China basically). Ostensibly the eldest child can't just do nothing with their gains from lending to the family, so they invest it and grow the overall wealth of the family. If the family finances get to our of hand, the parents (government) step in with new rules forcing (taxation and austerity for example) stabilization of the family finances.TLDR; +90% of the debt is owed to individuals and corporations in America
>>61252381ts the highest since the 2019/2020 crisisalso it was 50 billion on Friday
>>61253094the state and private investors arent the same entity theyre not lending from themselveswhat are you even trying to sayyou retarded fuck
>>61253238Yes. Fundamentally I’m just not convinced this is a negative sign, and ultimately think that the change to a standing repo facility 100% is impacting this. I will say, I will heavily be trying to figure out how a lend short borrow long banking regime is working, because I think if we do get another market crash soon then it’s 100% confirmed that repo volume must be a negative to the banking system because we’ve shifted to a regime where banks lend short so any borrowing is a negative. This flies in the face of traditional understanding of a banks place on the debt curve of course.
>>61254056In english Doc!
>>61254125I don’t know how to put that better into English. Basically how banks are supposed to make money is they will lend out money real long term, like funding 30 year mortgages, and will borrow the money short term from other banks or the Fed to fund this lending. If we get another liquidity event soon though I think basically it confirms banks can only function by lending money to the Fed, reverse repo, and any sort of borrowing short signals major funding stress. The question then is how are they “lending long”, how are reserves getting in the system that people aren’t seeing? It can’t be all QE.
>>61254183*how are they “borrowing long”.
>>61252381>the devil's advocate was misremembering the whole timeIt's over
>>61254183Since 2008 didn't they push all their risk into the off the books shadow banking bs where it's suspected everyone is leveraged up to the tits?
>>61254208I was misremembering post 2008 repo volume, but that doesn’t I believe impact the fact that SOFR often would go above the feds upper corridor before the standing repo facility was added, which I think is a bit more core of an argument here
>>61254221You have it backwards, 2008 was caused by the shadow banking system, off balance sheet OTC assets in the Eurodollar system blowing up, post 2008 with Dodd Frank such assets were to be brought on balance sheet and made part of the calculations for capital requirements
>>61254235But did the shadow banking stop since?
>>61254224I found some datahttps://en.macromicro.me/collections/4238/us-federal/17668/us-fed-fund-interest-ratehttps://en.macromicro.me/charts/127851/us-fed-fund-interest-rate
>>61254260Yes, these assets got brought on balance sheet and regulated, and Eurodollar growth has been extremely slow compared to total deposit growth https://www.atlantafed.org/-/media/documents/news/conferences/2024/05/19/financial-markets-conference/presentations/mccauley-presentation.pdf>>61254290Exactly yes, you can see spikes on the chart before the standing repo facility was implemented where SOFR traded above, notably during trumps first term and first round of tariffs, where no liquidity event transpired.
>>61254311>where no liquidity event transpired.There was the crisis in 2019 that prompted the Fed to go back to easing and make SRF permanent
>>61254290>>61254311And again we have plenty of data with LIBOR lending anyway, which has much more data available and was the preferred funding benchmark prior to 2012 anyway
>>61254316September 2019 yes, but that’s a year and a half after the first the first spike in SOFR above the feds upper corridor
>>61254321I think historical data might be of limited value because of everything that's been messed with since then, esp. in 2020 where the Fed's intervention was beyond the scope of anything we've seen prior
>>61254322There was a SOFR spike last summer as well, might 19 be repeating?
>>61254324I agree. I am not convinced though we will repeat 2019, but if we do and there’s another liquidity event then 100% I think it’s safe to say the fundamentals of banking have changed.
>>61254329I just don’t think it’s that uncommon. Here’s another spike on the first rate raises, 3 years before 2019.
>>61251811three. noTHING WRONG WITH ME..
>>61254345Weren't rates pretty low at that point? It looks like the tail end of Obama and the beginning of Trump where USD was still seen as gold
>>61254356They were yes. This was the first rate hikes in 8 years.
>>61247359they hide it, rename it, do all these jewish tricks, but it is still money printing to keep this fake financial system stay a bit longer
>>61254370Yeah so if something happens this time it might be a combination of everything that's going on with the ongoing QT, the TGA, the debt, the shutdown, and other issues (weakening labor market, increase in foreclosures despite rates being cut, persistent inflation) that cause it to be taken worse than what could be absorbed by a healthy financial system with strong balance sheets. How were the bank reserve levels in 2016, 2019? IIRC they were still overly cautious because of the fallout of 2008, it might be the key factor
>>61254370Two questions.- How do you see the Genius Law and banks being able to print stablecoins backed by Us treasuries fit in this picture? That would be straight monetization of the debt and a big liquidity creation.- Student debt loan delinquency is spiking up badly. That is 1.8 Trillions in debt. Who owns that debt? Has it been repacked into shit debt and sold to investors like the subprime mortgages in 2008?
>>61254444Checkity checked.- Are not they looking at this situation closely?- Why is the Move index so low if tensions are building up?
>>61254444Found this chart, which suggests the incident in 2019 coincided with the tightening at the time and starved bank reserves>>61254456Doesn't MOVE track Treasuries? The repo concerns are over a bottleneck in the cash available on the market even with an excess of cash-like instruments like Treasuries to borrow against
Latest SOFR spread is down so it probably isn't Happening(tm) today
>>61254920But the frequency of the spikes is increasing so one of these days...
>>61247211tldr i guess will just staked lock and usdc all the while instead of caring this much
>>61254444>>61254873Bank reserves are not what they seem really anymore, bank reserve requirements got dropped to zero, and Tier 1 assets got updated. I’m not knowledgable enough to tell you specifically what the impact was to how banks hold reserves beyond that they treasuries are more liquid, but just know that reserves held in cash at the Fed are by economic choice now and not by requirement. >>61254445>That would be straight monetization of the debt and a big liquidity creation.How is that any different then them being able to create dollar deposits at will backed by treasuries already?>Who owns that debt? Has it been repacked into shit debt and sold to investors like the subprime mortgages in 2008?I don’t know, but I do know the issue with 2008 was specifically with the counterparty credit risk of the OTC derivatives making up the synthetic CDO’s. Bad loans are made all the time and part of the game, the issue is not if bad loans are being made but instead if the insurance you bought on the bad loan was fraudulent.
>>61255254One goes to fund partially the real economy, with those fiat deposits being used in productive activities, even if in the end it ends up in the big pockets.The other goes straight to the cryptosphere, what productive activities can you fund with stablecoins?(i am not an expert btw i am genuinely trying to figure this out)
>>61255503I agree with you yes, I am also not an expert on where stablecoin flows will go, and would agree ostensibly it will flow somewhere in the crypto ecosystem, or at least to tradfi actors over the blockchain.
>>61255503Right now stablecoins are just pumping and dumping crypto pricesIn theory the stablecoins could be used as cash replacements for all payments in the economy. From stimmy packages a la trumpbucks, to capturing additional market share of foreign markets using the global liquidity of the us dollar. Theres many trillions of dollars sitting in the eurodollar markets; those could also be incorporated. All electronic payments could easily switch to being on-chain. This of course would drive up demand for whatever shitcoin the stables run onTheres a huge boom waiting to happen. Its just that none of that is being done, yet.
>>61255575>>61255503That is to be specific, I agree the flows if minted in stablecoin will go somewhere else than otherwise it would go if it was a bank deposit created, however I do not think this will impact monetization of the debt or liquidity any more than it does currently since both are fundamentally the same process of creating money.
>>61253245The private investors are inextricably linked to the state, hence the analogy of a family you massive faggot. National Wealth is more than just liquid assets, a lot more, and is much larger than GDP. The family in the analogy has debt equal to its income but has 10-20x more wealth, this same principal applies to the USA. Even rootless cosmopolitans have no better option than investing in the US, as China has demonstrated that the Han mafia will just nationalize your gainz if they need/want. The EU is a glorified tourist trap regulated up to their tits. Russia? India? Brazil? Laughable. Where else does it make sense to park capital in the world??Most people don't understand that most of the US national debt is owed to Americans (~90%) and most of the foreign owned debt is owed to American allies. Kvetching about the gdp to debt ratio is a red herring used to advance other agendas like austerity (which benefits those who are already wealthy) or the excessive finacialization of the US economy at the expense of manufacturing or defense spending (legitimate concern).In case you still don't get it:> Gubermint debt forces greater transfer of national wealth to the (((finance class))) via interest payments on T-bills > The (((finance class))) faces massive diminishing returns and other unforseen consequences if they attempt to engage in capital flight > (((Finance classes))) are eventually forced to choose between investing "in the family", which negates the impact of the debt by growing the GDP, or worse fates.Basically, zoom out and think faggot
>>61255643Do you think the Fed is looking at this right now closely? What do you think they are going to do to fix the situation?They cant leave the whole thing to collapse.
>>61256263What do you mean, looking at repo usage going up? I don’t think anything is collapsing, I’ve amended my stance in this thread already though to “if the market does collapse people need to take the root cause of repo usage being a negative now seriously and amend their understanding of banking”. Undoubtably yes they are looking at, I imagine though they are looking at it seeing if they expect any sort of structural liquidity issues that the SRF cannot cover
