Brilliant! This is literally the most succinct, logical and clear summary of the US monetary system Ive come across on UA-cam to date and would be an excellent educational source for undergrad/budding Economists. It clearly explains what both Alfonzo and Jeff have been tying to say for years. Great work.
This guy is great. Alfonzo asks great questions too, great combo…looking forward to seeing part 2! I wonder if this likes Bitcoin or even what he think of Bitcoin on a fundamental level. Thanks blockworks!
Generally a conscise representation of the monetary system just as explained by MMT. The only important function not discussed is that 97% of money, although created through banks, only a part of it is created by loan creation within the bank. The rest is created by public spending. The not taxed surplus stays in private hands as equity. So folks if you want to reduce the public debt please also state which private equity should be reduced.
QE works by reducing interest rates on real estate which allows people to buy a more expensive house or car than they otherwise could have. This higher loan amount made by the banks is how the actual money/credit gets into the economy. These housing bubbles are the main cause of inflation due to all the high value loans made. Plus even people not buying houses thinks their own house is now worth more and takes out a home equity loan which is more new money creation. That's why the Fed is curry raising the rates to kill excess real estate investment which slows the rate of new money creation as less new loans are made to buy real estate.
I have a question about pension funds not buying televisions: I get that pension funds don't directly buy televisions, but they might buy equities or corporate debt in a hotel chain, and the hotel chain buys televisions, and bread and coffee etc. Is it fair to say that this is a simplification and that in the real economy some of the money invested by pension funds does contribute to consumer inflation?
They addressed this question in the video: The pension fund direct investment/lending market is very small. Only a small % of the total “debt market” is made up of pension funds who have participated in a QE transaction, and who are also lending out the cash they “recieve” from the transaction directly into the real economy. Its not significant compared to the ammount of “bank deposit money” created outside of the QE process.
The hotel chain only buys more televisions and bread and coffee if more people come to sleep at their hotels. And that requires more effective demand which requires spendable income for the people that actually sleep in those hotels. So the distribution of income and the resulting effective demand at the current income distribution and saving desired determines how much televisions are actually bought. And you can look at the the net spendable income of the majority of consumers and see that it even worsened during QE.
Thank you. Now we understand how QE causes an increase in financial asset valuations. Thus, it is clear that the FED is responsible for creating the conditions for the 'everything bubble' economy. It may not be 'money printing' per se, but the impact on financial asset prices is nonetheless significant.
You're the only person, besides myself, that had typed in "everything bubble". I 100% agree with you. Imo, we're in one of the biggest bubbles of all time and when it pops, its going to he ugly and I doubt US will stay at the top after the dust settles.
The question I always wonder but not seen answered is are the primary dealers buying treasuries from the treasury in Reserves or "spendable dollars" surely it can't be reserves as that wouldn't allow the government to buy things from the economy, so would be pointless. If this is the case then through a circuitous route the feds treasury buying from primary dealers does lead to inflation just by forcing the primary dealers to buy more treasuries. I'm not going to lie however many times I watch and listen to explanations of the reserve system, of which this was a good start definitely, it just leads to more questions in my mind not less.
- why does the fed do QE? in what way does it help the economy? - bank reserves and cash are liabilities to the FED and banks can't lend those reserves to people/business because they don't have an account at the CB. But with the introduction of CBDC, they will. Can the banks then lend those reserves to people/businesses? - 12:49, doesn't he mean that the FED would have LESS (he says more) reserves as of this operation? - bank deposits can be turned into cash by going to an atm, how does that work? the 3rd party liability changes
My Take: * Bank Reserves is essentially money. It's money. * Bank Reserves encourages bank lending which gets into the real economy, which can be inflationary * Bank Reserves, more likely, "encourages" asset price inflation (stocks, bonds, investable stuff) * Bank reserves can be turned into cash In Other Words * Bank Reserves is money held at the Fed * Deposit Money is money held at the bank * Cash is money held in the hands of end user people ** These are just labels placed on "money" depending on where the money is. Is it with the Fed, is it in banks, or is it in the hands of real people in the form of cash *** Essentially Bank Money is Money, Deposits are Money, Cash is Money.... It's all money. The difference is "where it's held". Aside: 1. CHIPS: In the context of the Federal Reserve Banking and money and payment systems, "chips" refers to the Clearing House Interbank Payments System (CHIPS). CHIPS is a real-time gross settlement (RTGS) system that facilitates the electronic transfer of funds between financial institutions in the United States. CHIPS is operated by the Federal Reserve Bank of New York and is the largest RTGS system in the world. It handles trillions of dollars in transactions each day. CHIPS is a critical component of the US payment system. It allows banks to settle payments with each other quickly and securely. This helps to ensure that the financial system is stable and that payments can be made efficiently. 2. OFR US Treasuries: "Over the Counter" or "Off the Run" US Treasuries OFR US treasuries are those that are not the most recently issued Treasury securities. They are typically issued several months or even years ago. OTR treasuries are traded in the secondary market, which means that they are bought and sold by investors after they have been issued. 3. OTR US Treasuries: "On the Run" US Treasuries OTR US treasuries are those that are the most recently issued Treasury securities. They are typically issued every four weeks by the US Treasury. OFR treasuries are traded in the primary market, which means that they are bought and sold by investors directly from the US Treasury. There are a few key differences between OTR and OFR US treasuries. First, OTR treasuries are typically more illiquid than OFR treasuries. This means that it can be more difficult to buy or sell OTR treasuries, and the prices of OTR treasuries can be more volatile. Second, OTR treasuries typically have higher yields than OFR treasuries. This is because OTR treasuries are seen as being more risky than OFR treasuries, as they are not the most recently issued Treasury securities.
_"Bank Reserves encourages bank lending which gets into the real economy, which can be inflationary"_ Indirectly that might be the case but not because banks have more reserves but because the excess reserves cause the interest rate to fall to zero or to whatever the central bank pays as a support rate. This makes loans cheaper, as it removes the drag of a positive policy rate on the economy. But still to actually lend the banks need credit-worthy borrowers that actually want to borrow. This is the ultimate restriction of bank lending. It has nothing to do with the amount of reserves currently available as the bank can always borrow more if they need it. They need borrowers that are a) creditworthy and b) want to borrow at the current interest rate. Banks can not force credit onto the private sector just because they have excess liquidity as central bank reserves. And borrowers only borrow if there is an investment and if they are credit-worthy which might not be the case even though the policy rate is already at zero. This is also sometimes referred to as "you can not push on a string". Higher interest rates can create an artificial drag on the economy but letting lose the string does not push the economy. It's like trying to gain weight by buying a longer belt. _"Bank reserves can be turned into cash"_ Yes but only up to the amount of net balances the customers hold at private banks. So even if the banks have more reserves they wouldn't have any more or less capacity to pay it out. Simply increasing the reserves does not necessarily change the net balances of private customers at the private banks. It depends on who was the holder of the bond that the central bank bought. If they buy the bonds only from the banks the net balance of private bank money is not affected and if they buy it from private bond holders is very much depends on if and how they use the liquidity.
I'm convinced that the majority of Retail traders believe thet "Printing Money" in this context, is literally Minting Bills. And they've been convinced that the "stimulus" checks sent out to the bottom 60% of Americans has something to do with the economic situation we find ourselves in now.
@@meiko_kaji if left to "market forces" there would be a negative feedback effect that would lead to a crash in real new investment. The real economy would stagnate due to lenders and investors being too scared to invest in new Capital. The only major profit would be made from hedge funds and corporations playing in the nasdaq. The govt spending literally jumpstarts the investment cycle, govt provides security to risky investments and gives the needed reserves to "stabilize" markets. If you're curious at what raw market forces would look like in finance, just look at the Crypto global market, 40% + - is normal in Crypto. In the nasdaq, people would be crying the sky is falling and we're entering a new great depression.
What's the purpose of this question? Is it to make the average Joe Blow understand what bank reserves are and how QE creates lots of it? Should Joe Blow care other than the fact that its basis is debt that he and others will eventually pay for? Hopefully you can simplify this a lot more.
A lot of the useable money/credit in the system is created by people using leverage to buy assets like a house, car, stocks, etc and then there is some hocus pocus going on with rehypothecation of collateral to borrow and leverage up even more, which Imo should be illegal but is apparently common. It's like 1929 and 2007 again so as leverage is forced to reduce due to higher cost to borrow, asset prices collapse. Cash is king (unless your house burns down, in which case gold would be a better idea since those fireproof safes aren't really)
Ok. This question may get answered but I need to write it down now or I will forget it. Concerning the QE that results in purchase of bonds from insitutional investors: If that money is credited as reserves at the institutional investor's bank, and those reserves are credited to the institutional investors account, then these deposits can go into buying stock, which puts money in the hands of the corporate sector, which can use that money to buy capital goods....thus QE produces competition for the basket of goods and contributes to inflation. This contradicts the thesis presented.
Taking one step at a time and trying new things help build your confidence to achieve your goals. To attain financial independence, Start investing, as it's the only way to maximize income. I spent over 10yrs working with a company that was a waste of my youthful days. Lately, discovered NFTs and life feels easier
@Allard Claire Generally, Investing requires experience and knowledge. So to attain productive investment, It's important to have a solid support structure to guide you. I operate with (Genevieve Glen Rogers) a financial advisor who partners with wealth management firm. For the record, the experience has been the best for my finance You can make quick internet research with her name mentioned and get in touch with her
Outside of bitcoin being volatile, why exactly is it funny to call it pristine collateral? It's a verified supply (unlike gold) which is fully traceable (unlike gold or stocks) and visible to all (unlike every financial instrument). Look at the collapse of the Terra/Luna stablecoin protocol. How did it affect Bitcoin other than in speculative price changes?
@@thesolitaryadventurer I don't know if i am wrong. But I believe that BTC is not pristine collateral since whose liability is BTC (i.e who are you claiming BTC from? - No one). It has 0 inherent value. Even the shittiest MBS are backed by Mortgage
@@chetweepoo6935 huh? it has no "intrinsic value" just like gold. golds usecase is only 10% of its value. so youre right, all gold bulls need to stop doing whatever theyre doing with an asset that has no value, and start storing barrels of oil in their homes or something
Thanks for the video. I have a question. My understanding is that banks have to keep a % of the loans they make as reserves. Therefore, if the fed increases rheir rederves via QE, wouldnt the bank be able to lend more? (Assuming there is a voluntary person or company in the real economy that wants to borrow)? That would be inflationary, is it? If increasing bank reserves via QE doesnt impulse lending from comm banks (which is inflationary), whAT was the purpose of QE then? Dodnt the fed say they wanted to foster lending? Thank you In summary, my point is if reserves hsve to be 3% of loans (for ex) and the fed increases reserves via QE, then banks can lend more. More lending creates more money in the system. More money is inflationary. What am I missing? Thanks
Increasing the bank’s reserves has an effect on lowering the Fed funds rate which is the rate in which banks lend excess reserves to each other. Since there are more reserves, banks can lend more before hitting that reserve to deposit ratio.Since banks don’t have to borrow as much reserves from other banks, the rate of loans for people can be lower.
In theory, lower rates spur borrowing as lower. The problem is that that may not necessarily be the case. Why aren’t people borrowing at these low rates? Or why aren’t people with good credit willing to take on loans? They could give loans to people with bad credit but that’s more risk. Probably because the don’t have the appetite for debt. They are on saving mode. They might still have debt. People are worried about their jobs, or companies are worried about revenues. Housing prices might be too unaffordable for a lot of people even with favorable financing.
I value Macro Alf’s input. But before I give anybody’s opinion serious consideration I like to “fact check” their credentials. The fact that he graduated in 2014 and joined ING immediately, without significant prior experience, raises questions about whether he would have been entrusted with such a senior role managing a $20 billion portfolio, especially considering the global prominence of ING. Additionally, the absence of press releases or public statements from ING regarding his tenure as the Head of Investments and Portfolio Manager of Fixed Income adds to the skepticism. Typically, financial institutions announce significant appointments, especially at leadership levels, to showcase their team's expertise. It's worth noting that titles like "Head of Investments" can vary in meaning, ie., US mkt, Japan, China, emerging mkt, EU, etc. However, given the magnitude of the portfolio mentioned and the global stature of ING, there might be reasonable skepticism surrounding the clarity and accuracy of Alfonso Peccatiello's professional claims.
If your are seeking that old school definition of money, that’s concept died over hundred years ago. Currently the ledgers function like money, currency, credit and derivatives simultaneously.
@@anonymousAJ Nobody whit a sane mind "stores" wealth in paper money but that doesn't mean that paper money, or more general fiat money is not required or bad. In fact the history shows that fiat money was and is a vital part of economic activity since at least 5000 years. You can repeat the barter myth but that doesn't make it true. I know not a single person that holds fiat money in excess of their liquidity preference and why would anybody do that? Its not like anybody forces you to hold cash. Go buy whatever you want from your income. You can buy gold if you think that gold is a good "store of value". Where is the problem?
It is money printing when the Fed buys treasury bonds from institutions, does not recovery that money from the Treasury, and institutions use the Fed credit to buy new treasury bills.....and thus Treasury spends that money in the real economy = inflation.
Gold is a commodity and money is exactly not a commodity but a promise, an IOU, a promise to pay. There is literally no point in using the term money as a perfect substitute for commodity which is why everybody that thinks like this is unable to explain anything relevant about a monetary economy. People that think that only commodities are money are stuck in an a-historical fantasy model of a robinson crusoe economy that never existed in the first place and where every transaction is immediately settled through barter and where credit does not exist.
Brilliant! This is literally the most succinct, logical and clear summary of the US monetary system Ive come across on UA-cam to date and would be an excellent educational source for undergrad/budding Economists. It clearly explains what both Alfonzo and Jeff have been tying to say for years. Great work.
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And only 10k views, unbelivible
As a long-time Jeff Snider stan, this video pleases me. Well done.
This guy is great. Alfonzo asks great questions too, great combo…looking forward to seeing part 2! I wonder if this likes Bitcoin or even what he think of Bitcoin on a fundamental level. Thanks blockworks!
This is the best video I have ever seen
This was great at helping to join up all the dots!
Ahhhhh now everything makes more sense!!!
Generally a conscise representation of the monetary system just as explained by MMT. The only important function not discussed is that 97% of money, although created through banks, only a part of it is created by loan creation within the bank. The rest is created by public spending. The not taxed surplus stays in private hands as equity. So folks if you want to reduce the public debt please also state which private equity should be reduced.
Holy crap this was great! Thanks for the education!
Compare the reserve credit at the New York Fed to the reserve credit at the San Francisco Fed. What gets printed in New York stays in New York.
QE works by reducing interest rates on real estate which allows people to buy a more expensive house or car than they otherwise could have. This higher loan amount made by the banks is how the actual money/credit gets into the economy. These housing bubbles are the main cause of inflation due to all the high value loans made. Plus even people not buying houses thinks their own house is now worth more and takes out a home equity loan which is more new money creation. That's why the Fed is curry raising the rates to kill excess real estate investment which slows the rate of new money creation as less new loans are made to buy real estate.
no, you don't understand it
Thank you Gentlemen for a quality video
Bring him back that interview was awesome!
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most valuable video ever for anyone that still thinks fed prints money
The Fed does print money
Fantastic podcast. Very easily understandable even to the layman. The charts were on point. Thank you and please do a part 2.
I have a question about pension funds not buying televisions: I get that pension funds don't directly buy televisions, but they might buy equities or corporate debt in a hotel chain, and the hotel chain buys televisions, and bread and coffee etc. Is it fair to say that this is a simplification and that in the real economy some of the money invested by pension funds does contribute to consumer inflation?
only in the sense that the MMMF is a source of working capital funding
Don't know what i was thinking....you did say pension funds not MMMF, my bad
They addressed this question in the video: The pension fund direct investment/lending market is very small. Only a small % of the total “debt market” is made up of pension funds who have participated in a QE transaction, and who are also lending out the cash they “recieve” from the transaction directly into the real economy. Its not significant compared to the ammount of “bank deposit money” created outside of the QE process.
The hotel chain only buys more televisions and bread and coffee if more people come to sleep at their hotels. And that requires more effective demand which requires spendable income for the people that actually sleep in those hotels. So the distribution of income and the resulting effective demand at the current income distribution and saving desired determines how much televisions are actually bought. And you can look at the the net spendable income of the majority of consumers and see that it even worsened during QE.
Thank you. Now we understand how QE causes an increase in financial asset valuations. Thus, it is clear that the FED is responsible for creating the conditions for the 'everything bubble' economy. It may not be 'money printing' per se, but the impact on financial asset prices is nonetheless significant.
Nah bro assets only go up. See you at the moon 🌚🚀💎💎💎💎
You're the only person, besides myself, that had typed in "everything bubble". I 100% agree with you. Imo, we're in one of the biggest bubbles of all time and when it pops, its going to he ugly and I doubt US will stay at the top after the dust settles.
That was an excellent explanation- thank you
The question I always wonder but not seen answered is are the primary dealers buying treasuries from the treasury in Reserves or "spendable dollars" surely it can't be reserves as that wouldn't allow the government to buy things from the economy, so would be pointless. If this is the case then through a circuitous route the feds treasury buying from primary dealers does lead to inflation just by forcing the primary dealers to buy more treasuries. I'm not going to lie however many times I watch and listen to explanations of the reserve system, of which this was a good start definitely, it just leads to more questions in my mind not less.
- why does the fed do QE? in what way does it help the economy?
- bank reserves and cash are liabilities to the FED and banks can't lend those reserves to people/business because they don't have an account at the CB. But with the introduction of CBDC, they will. Can the banks then lend those reserves to people/businesses?
- 12:49, doesn't he mean that the FED would have LESS (he says more) reserves as of this operation?
- bank deposits can be turned into cash by going to an atm, how does that work? the 3rd party liability changes
This is excellent stuff! Thank you.
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Can equities in hi quality companies be accepted as money or as "Rehypothecated Collateral"?
My Take:
* Bank Reserves is essentially money. It's money.
* Bank Reserves encourages bank lending which gets into the real economy, which can be inflationary
* Bank Reserves, more likely, "encourages" asset price inflation (stocks, bonds, investable stuff)
* Bank reserves can be turned into cash
In Other Words
* Bank Reserves is money held at the Fed
* Deposit Money is money held at the bank
* Cash is money held in the hands of end user people
** These are just labels placed on "money" depending on where the money is. Is it with the Fed, is it in banks, or is it in the hands of real people in the form of cash
*** Essentially Bank Money is Money, Deposits are Money, Cash is Money.... It's all money. The difference is "where it's held".
Aside:
1. CHIPS:
In the context of the Federal Reserve Banking and money and payment systems, "chips" refers to the Clearing House Interbank Payments System (CHIPS). CHIPS is a real-time gross settlement (RTGS) system that facilitates the electronic transfer of funds between financial institutions in the United States.
CHIPS is operated by the Federal Reserve Bank of New York and is the largest RTGS system in the world. It handles trillions of dollars in transactions each day.
CHIPS is a critical component of the US payment system. It allows banks to settle payments with each other quickly and securely. This helps to ensure that the financial system is stable and that payments can be made efficiently.
2. OFR US Treasuries: "Over the Counter" or "Off the Run" US Treasuries
OFR US treasuries are those that are not the most recently issued Treasury securities. They are typically issued several months or even years ago. OTR treasuries are traded in the secondary market, which means that they are bought and sold by investors after they have been issued.
3. OTR US Treasuries: "On the Run" US Treasuries
OTR US treasuries are those that are the most recently issued Treasury securities. They are typically issued every four weeks by the US Treasury. OFR treasuries are traded in the primary market, which means that they are bought and sold by investors directly from the US Treasury.
There are a few key differences between OTR and OFR US treasuries. First, OTR treasuries are typically more illiquid than OFR treasuries. This means that it can be more difficult to buy or sell OTR treasuries, and the prices of OTR treasuries can be more volatile. Second, OTR treasuries typically have higher yields than OFR treasuries. This is because OTR treasuries are seen as being more risky than OFR treasuries, as they are not the most recently issued Treasury securities.
_"Bank Reserves encourages bank lending which gets into the real economy, which can be inflationary"_
Indirectly that might be the case but not because banks have more reserves but because the excess reserves cause the interest rate to fall to zero or to whatever the central bank pays as a support rate. This makes loans cheaper, as it removes the drag of a positive policy rate on the economy. But still to actually lend the banks need credit-worthy borrowers that actually want to borrow. This is the ultimate restriction of bank lending. It has nothing to do with the amount of reserves currently available as the bank can always borrow more if they need it. They need borrowers that are a) creditworthy and b) want to borrow at the current interest rate. Banks can not force credit onto the private sector just because they have excess liquidity as central bank reserves. And borrowers only borrow if there is an investment and if they are credit-worthy which might not be the case even though the policy rate is already at zero. This is also sometimes referred to as "you can not push on a string". Higher interest rates can create an artificial drag on the economy but letting lose the string does not push the economy. It's like trying to gain weight by buying a longer belt.
_"Bank reserves can be turned into cash"_
Yes but only up to the amount of net balances the customers hold at private banks. So even if the banks have more reserves they wouldn't have any more or less capacity to pay it out. Simply increasing the reserves does not necessarily change the net balances of private customers at the private banks. It depends on who was the holder of the bond that the central bank bought. If they buy the bonds only from the banks the net balance of private bank money is not affected and if they buy it from private bond holders is very much depends on if and how they use the liquidity.
@@trixn4285 thank you
I'm convinced that the majority of Retail traders believe thet "Printing Money" in this context, is literally Minting Bills. And they've been convinced that the "stimulus" checks sent out to the bottom 60% of Americans has something to do with the economic situation we find ourselves in now.
@@meiko_kaji if left to "market forces" there would be a negative feedback effect that would lead to a crash in real new investment. The real economy would stagnate due to lenders and investors being too scared to invest in new Capital. The only major profit would be made from hedge funds and corporations playing in the nasdaq. The govt spending literally jumpstarts the investment cycle, govt provides security to risky investments and gives the needed reserves to "stabilize" markets. If you're curious at what raw market forces would look like in finance, just look at the Crypto global market, 40% + - is normal in Crypto. In the nasdaq, people would be crying the sky is falling and we're entering a new great depression.
Great stuff! Thx Maroon_macro.
Lol, this guy's a NERD*. Love it!
* In the best way---deep and detailed knowledge.
can the reserves end up funding margin ...
What's the purpose of this question? Is it to make the average Joe Blow understand what bank reserves are and how QE creates lots of it? Should Joe Blow care other than the fact that its basis is debt that he and others will eventually pay for? Hopefully you can simplify this a lot more.
Please, how to get in contact with this dude?
What is the percentage of bank reserves and bank deposits in real economy then if the cash amount is 2,5 % ?
A lot of the useable money/credit in the system is created by people using leverage to buy assets like a house, car, stocks, etc and then there is some hocus pocus going on with rehypothecation of collateral to borrow and leverage up even more, which Imo should be illegal but is apparently common. It's like 1929 and 2007 again so as leverage is forced to reduce due to higher cost to borrow, asset prices collapse. Cash is king (unless your house burns down, in which case gold would be a better idea since those fireproof safes aren't really)
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Ok. This question may get answered but I need to write it down now or I will forget it. Concerning the QE that results in purchase of bonds from insitutional investors: If that money is credited as reserves at the institutional investor's bank, and those reserves are credited to the institutional investors account, then these deposits can go into buying stock, which puts money in the hands of the corporate sector, which can use that money to buy capital goods....thus QE produces competition for the basket of goods and contributes to inflation. This contradicts the thesis presented.
That is true, QE is money printing and more liquidity for the overall economy
Precious metals are money and energy is currency right :-)
Is this Jeff Snider's younger brother?
Without a willing "borrower" there is no "money"
Taking one step at a time and trying new things help build your confidence to achieve your goals. To attain financial independence, Start investing, as it's the only way to maximize income. I spent over 10yrs working with a company that was a waste of my youthful days. Lately, discovered NFTs and life feels easier
@Allard Claire Generally, Investing requires experience and knowledge. So to attain productive investment, It's important to have a solid support structure to guide you. I operate with (Genevieve Glen Rogers) a financial advisor who partners with wealth management firm. For the record, the experience has been the best for my finance
You can make quick internet research with her name mentioned and get in touch with her
Can you explain these topic in more layman term so everyone can understand ?
Read the comment I just made
Raoul Pal called bitcoin the most pristine collateral 😂😂
Outside of bitcoin being volatile, why exactly is it funny to call it pristine collateral?
It's a verified supply (unlike gold) which is fully traceable (unlike gold or stocks) and visible to all (unlike every financial instrument).
Look at the collapse of the Terra/Luna stablecoin protocol. How did it affect Bitcoin other than in speculative price changes?
@@thesolitaryadventurer I don't know if i am wrong. But I believe that BTC is not pristine collateral since whose liability is BTC (i.e who are you claiming BTC from? - No one). It has 0 inherent value. Even the shittiest MBS are backed by Mortgage
@@chetweepoo6935 huh?
it has no "intrinsic value" just like gold. golds usecase is only 10% of its value. so youre right, all gold bulls need to stop doing whatever theyre doing with an asset that has no value, and start storing barrels of oil in their homes or something
Thanks for the video. I have a question. My understanding is that banks have to keep a % of the loans they make as reserves. Therefore, if the fed increases rheir rederves via QE, wouldnt the bank be able to lend more? (Assuming there is a voluntary person or company in the real economy that wants to borrow)? That would be inflationary, is it?
If increasing bank reserves via QE doesnt impulse lending from comm banks (which is inflationary), whAT was the purpose of QE then? Dodnt the fed say they wanted to foster lending? Thank you
In summary, my point is if reserves hsve to be 3% of loans (for ex) and the fed increases reserves via QE, then banks can lend more. More lending creates more money in the system. More money is inflationary. What am I missing? Thanks
Increasing the bank’s reserves has an effect on lowering the Fed funds rate which is the rate in which banks lend excess reserves to each other.
Since there are more reserves, banks can lend more before hitting that reserve to deposit ratio.Since banks don’t have to borrow as much reserves from other banks, the rate of loans for people can be lower.
In theory, lower rates spur borrowing as lower. The problem is that that may not necessarily be the case. Why aren’t people borrowing at these low rates?
Or why aren’t people with good credit willing to take on loans?
They could give loans to people with bad credit but that’s more risk.
Probably because the don’t have the appetite for debt. They are on saving mode. They might still have debt. People are worried about their jobs, or companies are worried about revenues.
Housing prices might be too unaffordable for a lot of people even with favorable financing.
You're right. QE is liquidity and promotes more bank lending/asset inflation
I value Macro Alf’s input. But before I give anybody’s opinion serious consideration I like to “fact check” their credentials.
The fact that he graduated in 2014 and joined ING immediately, without significant prior experience, raises questions about whether he would have been entrusted with such a senior role managing a $20 billion portfolio, especially considering the global prominence of ING.
Additionally, the absence of press releases or public statements from ING regarding his tenure as the Head of Investments and Portfolio Manager of Fixed Income adds to the skepticism. Typically, financial institutions announce significant appointments, especially at leadership levels, to showcase their team's expertise.
It's worth noting that titles like "Head of Investments" can vary in meaning, ie., US mkt, Japan, China, emerging mkt, EU, etc. However, given the magnitude of the portfolio mentioned and the global stature of ING, there might be reasonable skepticism surrounding the clarity and accuracy of Alfonso Peccatiello's professional claims.
Digital dollar straight to public if you don't spend you lose it. That's the future.
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00:51 "What is money?" And he proceeds to talk about currency, which is not money
If your are seeking that old school definition of money, that’s concept died over hundred years ago. Currently the ledgers function like money, currency, credit and derivatives simultaneously.
@@georgeokello8620 OK, you store your wealth in paper and I'll save money. Let's see which evaporates more quickly
@@georgeokello8620 The gold price chart shows that old school money is far from dead. 5000 year bull market vs fiat money.
@@anonymousAJ Nobody whit a sane mind "stores" wealth in paper money but that doesn't mean that paper money, or more general fiat money is not required or bad. In fact the history shows that fiat money was and is a vital part of economic activity since at least 5000 years. You can repeat the barter myth but that doesn't make it true. I know not a single person that holds fiat money in excess of their liquidity preference and why would anybody do that? Its not like anybody forces you to hold cash. Go buy whatever you want from your income. You can buy gold if you think that gold is a good "store of value". Where is the problem?
Money is Ethereum's soon to become deflationary ultra sound money.
This guy is brilliant whats his real name?
It is money printing when the Fed buys treasury bonds from institutions, does not recovery that money from the Treasury, and institutions use the Fed credit to buy new treasury bills.....and thus Treasury spends that money in the real economy = inflation.
Gold is money. The end. I just saved you 31 minutes
Gold is a commodity and money is exactly not a commodity but a promise, an IOU, a promise to pay. There is literally no point in using the term money as a perfect substitute for commodity which is why everybody that thinks like this is unable to explain anything relevant about a monetary economy.
People that think that only commodities are money are stuck in an a-historical fantasy model of a robinson crusoe economy that never existed in the first place and where every transaction is immediately settled through barter and where credit does not exist.
Immediately turned it off after bank deposits was mentioned as money before gold. Gold is money. Silver is money. Nothing else.
That's true theoretically, but not in the present system we live in today....
Money is the ability to buy good looking women hearts