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Old 21st October 2017, 06:46 AM   #161
GnaGnaMan
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Originally Posted by Tippit View Post
Money creation is a zero-sum, regressive transfer of wealth. It is taxation, at best, or counterfeiting/theft, at worst. The "rising tide" analogy is similar to the "trickle down" fallacy. The mechanism is that central banks make enormous amounts of money available to a select few at little to no cost.
Here's what I get:
As long as the interest is lower than the expected return, you make a profit. The price of an asset is bid up until the return equals the interest.
The super-rich pay less interest on loans. This allows them to outbid ordinary people.

What I don't get is how this is related to fractional reserve banking. People who are less risky borrowers pay less interest. How is the monetary system in particular (as opposed to rating agencies and bail-outs) distorting this?

Quote:
Yes, this is true, and this is the cause of the modest (understated) inflation that we currently have. However, dividends, interest, and rents make up a huge portion of consumer spending. As the assets that throw off these cash flows get consolidated into fewer and fewer hands, it would actually have a deflationary effect on consumer prices, and that is what I contend is happening. Not actual deflation, but a rate of consumer price inflation that is vastly less than what would be indicated by the rapidly expanding money supply. As fewer and fewer people own assets, they have less passive income to spend on consumer goods.
So a super-rich buys an asset. Now the super-rich owns the asset and the seller owns money.
Because the super-rich receives cash flow on the asset, the money that the seller has, flows back to him eventually. So it's basically like a game of Monopoly.
Is that it?
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Old 21st October 2017, 06:48 AM   #162
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Originally Posted by psionl0 View Post
With other "super-rich" guys. In the process of bidding up the price of these assets they vacuum up money from the unrich people.
How do they vacuum up the money? Wouldn't they be spreading money by paying inflated prices?
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Old 21st October 2017, 09:25 AM   #163
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Originally Posted by GnaGnaMan View Post
How do they vacuum up the money? Wouldn't they be spreading money by paying inflated prices?
They spread the money among themselves.

In the mean time, the poor schmuck who wants a place to live in either has to pay higher rents or get a bigger mortgage.
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Old 21st October 2017, 09:28 AM   #164
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Originally Posted by JJM 777 View Post
And this new money should be created "out of thin air", or based on something that "justifies" creating more money?
Have I (not Tippit) ever said anything else?

http://www.internationalskeptics.com...5&postcount=79
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Old 21st October 2017, 09:46 AM   #165
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Originally Posted by psionl0 View Post
They spread the money among themselves.
But how? That only works if the assets are already concentrated at the top. If they have to buy the assets from the general population, this puts money in the hands of the general population.

Quote:
In the mean time, the poor schmuck who wants a place to live in either has to pay higher rents or get a bigger mortgage.
If the cost of living goes up without any change in quality, that's inflation.

How do you make people pay a bigger share of their income for rent/mortgage payments just because you payed more for the home/flat?
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Old 21st October 2017, 10:39 AM   #166
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Originally Posted by GnaGnaMan View Post
Here's what I get:
As long as the interest is lower than the expected return, you make a profit. The price of an asset is bid up until the return equals the interest.
The super-rich pay less interest on loans. This allows them to outbid ordinary people.
The price of assets will get bid up regardless of fundamentals like earnings, or dividends, simply by increasing the money supply, whether it's just counterfeit money introduced into the system, or credit. Keep in mind that central banks just conjure money out of thin air and buy assets. This rewards sellers with fantasy bids that aren't based on market forces. Not only does this effectively nationalize the asset (communism), but it rewards the seller with a subsidy that shouldn't exist. Also if loans go sour but are written off, and new credit extended, then this is simply glorified counterfeiting.

Quote:

What I don't get is how this is related to fractional reserve banking. People who are less risky borrowers pay less interest. How is the monetary system in particular (as opposed to rating agencies and bail-outs) distorting this?
It's related in the sense that base money is fiat money, and inflating the base money supply distorts market prices to the benefit of asset holders.

JP Morgan has been admitted to be a "contingent liability" of the Federal Reserve. This effectively means that the Fed will create unlimited amounts of money to bail it out, as it is "too big to fail". Since JP Morgan's "creditworthiness" is based on the ability of the Fed as a glorified counterfeiter to conjure money out of thin air and bail them out, don't you think that's problematic, besides a number of other problems?

Quote:

So a super-rich buys an asset. Now the super-rich owns the asset and the seller owns money. Because the super-rich receives cash flow on the asset, the money that the seller has, flows back to him eventually. So it's basically like a game of Monopoly.
Is that it?
Yes, except in this case, you start with $1500 while a few elite players get to use not only the money in the bank, but an unlimited supply of monopoly money from other games, and the price of Boardwalk isn't fixed arbitrarily low. They can simply outbid you when the property comes up for sale.
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Old 21st October 2017, 10:52 AM   #167
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Originally Posted by lupus_in_fabula View Post
You need to be more specific about what you mean by "the international dollar policy of the Federal Reserve". I really don't know what you intended to imply?


The Fed engages in swaps and other arrangements with foreign banks. Since those banks aren't member banks, those balances won't show up in the graph you linked. Your graph of member bank balances is useless for this discussion.

Quote:

…because you seem to put the blame on the Fed for increasing the money supply. I showed that it's actually the private financial system which did most of that prior to the financial crisis.
It's obvious to anyone with a brain that the Fed deserves blame for increasing the money supply. They have the exclusive monopoly right to do so. The fact that the fractional reserve system piles on top of this is relevant, but not the point when discussing the Fed.

Quote:

No, it's certainly not nonsensical. What do you think all that business about second mortgages was about if not someone noticing prices going up on existing assets across the board and further speculation about them continuing to rise – hence making subsequent credit based on the same asset possible and even seem like a great and riskless idea both for the lenders as well as the borrowers? Prices going up created a whole new market for new credit (think about the rise of the subprime loans market for example).
Lol. None of that credit would have existed a) without the Fed creating base money originally and b) if a private bank didn't conjure it on demand.

Quote:

Secondly, you also seem to forget the even larger "culprit" here. That is: shadow banking. Shadow banking was a far more important factor in the expansion of the whole financial system and for asset markets than traditional credit creation by banks (either public or private) – and here it's all about securitization, collateral chains and collateral leverage rather than money creation that matters.
So what? Shadow banks like hedge funds prove my case even more. They don't get to use the special accounting rules or benefit from fractional reserve banking, yet they have access to so much credit from the Fed that they can circumvent the traditional banking system entirely! Everyone knows, for instance, that Citadel hedge fund is a front for the Federal Reserve.

Money matters. Pinhead economists that pretend that it doesn't are wrong.
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Old 21st October 2017, 10:58 AM   #168
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Originally Posted by GnaGnaMan View Post
But how? That only works if the assets are already concentrated at the top. If they have to buy the assets from the general population, this puts money in the hands of the general population.


If the cost of living goes up without any change in quality, that's inflation.

How do you make people pay a bigger share of their income for rent/mortgage payments just because you payed more for the home/flat?
It's no mystery. Speculators and other property investors increase the demand for property and increased demand results in higher prices. If speculators are going to buy properties to rent out then they expect a decent return on their investment so they will charge higher rents which individuals who need a roof over their head have little option but to pay.

Less wealthy individuals can also benefit from rising property prices if they buy their own property but since it is usually only a single residence that they live in, they can't cash out without losing the roof over their head.
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Old 21st October 2017, 11:06 AM   #169
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Originally Posted by GnaGnaMan View Post
But how? That only works if the assets are already concentrated at the top. If they have to buy the assets from the general population, this puts money in the hands of the general population.
You're correct. To the extent that assets are sold by the general public, and those members of the public spend a portion of those on consumer goods, then "consumer price inflation" increases. To the extent that the proceeds are flipped into other assets, either by the public or the super-rich, you get asset price inflation, which apparently nobody seems to care about.

Quote:

If the cost of living goes up without any change in quality, that's inflation.
Remember that "inflation" is defined as some arbitrary narrow measure of some select consumer prices in the economy, by a government. I would argue that money creation is inflation. Productivity growth dictates that prices will go down, all else being equal.

Therefore, even if consumer prices don't budge and remain constant, you have inflation.

Quote:

How do you make people pay a bigger share of their income for rent/mortgage payments just because you payed more for the home/flat?
You can't. You can only get what the rental market is willing to pay. But what happens is that potential owners get priced out of the market and therefore necessarily become renters, increasing the demand for rentals. Everyone has to live somewhere, even if it's their mom's basement.
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Old 21st October 2017, 11:47 AM   #170
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Originally Posted by Tippit View Post
The price of assets will get bid up regardless of fundamentals like earnings, or dividends, simply by increasing the money supply, whether it's just counterfeit money introduced into the system, or credit. Keep in mind that central banks just conjure money out of thin air and buy assets. This rewards sellers with fantasy bids that aren't based on market forces. Not only does this effectively nationalize the asset (communism), but it rewards the seller with a subsidy that shouldn't exist. Also if loans go sour but are written off, and new credit extended, then this is simply glorified counterfeiting.


It's related in the sense that base money is fiat money, and inflating the base money supply distorts market prices to the benefit of asset holders.

JP Morgan has been admitted to be a "contingent liability" of the Federal Reserve. This effectively means that the Fed will create unlimited amounts of money to bail it out, as it is "too big to fail". Since JP Morgan's "creditworthiness" is based on the ability of the Fed as a glorified counterfeiter to conjure money out of thin air and bail them out, don't you think that's problematic, besides a number of other problems?


Yes, except in this case, you start with $1500 while a few elite players get to use not only the money in the bank, but an unlimited supply of monopoly money from other games, and the price of Boardwalk isn't fixed arbitrarily low. They can simply outbid you when the property comes up for sale.
Hang on. Are you saying the Fed lends money and then just writes it off without any proceeding? I find that hard to believe.
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Old 21st October 2017, 12:17 PM   #171
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Originally Posted by GnaGnaMan View Post
Hang on. Are you saying the Fed lends money and then just writes it off without any proceeding? I find that hard to believe.
The Fed has procedures to deal with "impaired loans".

From https://www.federalreserve.gov/about...instmt2016.pdf
Quote:
Loans are impaired when current information and events indicate that it is probable that the Reserve Bank will not receive the principal and interest that are due in accordance with the contractual terms of the loan agreement. Impaired loans are evaluated to determine whether an allowance for loan loss is required. The Reserve Banks have developed procedures for assessing the adequacy of any allowance for loan losses using all available information to identify incurred losses. This assessment includes monitoring information obtained from banking supervisors, borrowers, and other sources to assess the credit condition of the borrowers and, as appropriate, evaluating collateral values. Generally, the Reserve Banks would discontinue recognizing interest income on impaired loans until the borrower’s repayment performance demonstrates principal and interest would be received in accordance with the terms of the loan agreement. If the Reserve Banks discontinue recording interest on an impaired loan, cash payments are first applied to principal until the loan balance is reduced to zero; subsequent payments reapplied as recoveries of amounts previously deemed uncollectible, if any, and then as interest income.
According to the same report:
Quote:
At December 31, 2016 and 2015, the Reserve Banks did not have any loans that were impaired, restructured, past due, or on non-accrual status, and no allowance for loan losses was required. There were no impaired loans during the years ended December 31, 2016 and 2015. Interest income attributable to loans to depository institutions was $1 million during the year ended December 31, 2016.
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Old 21st October 2017, 02:19 PM   #172
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Originally Posted by GnaGnaMan View Post
Hang on. Are you saying the Fed lends money and then just writes it off without any proceeding? I find that hard to believe.
That's what bailouts are for. To socialize the losses of connected cronies by papering them over with counterfeit money. What else do you call the Fed's buying a worthless asset for 100 cents on the dollar?
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Old 22nd October 2017, 01:36 AM   #173
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Originally Posted by Tippit
he Fed engages in swaps and other arrangements with foreign banks. Since those banks aren't member banks, those balances won't show up in the graph you linked. Your graph of member bank balances is useless for this discussion.
Nope. Did you simply conjure that up?

First of all: swap lines are between central banks, and they do show up on their balance sheets.

Secondly, the Fed and other central banks opened the current swap lines as a response to the financial crisis because there wasn't any direct dollar liquidity funding available. Prior to the financial crisis, as documented by BIS, non-US banks' claims on the US official sector in terms of Federal Reserve funds (reserve balances) was effectively zero.

So the great irony in all this is that the Fed had to open swap lines with other central banks because there was a shortage of direct liquid dollar funding… i.e., the opposite of your erroneous claim (where you say asset prices grew because of the Fed providing reserves to foreign banks, even prior to the crisis).

Look here:



Originally Posted by Tippit
It's obvious to anyone with a brain that the Fed deserves blame for increasing the money supply. They have the exclusive monopoly right to do so. The fact that the fractional reserve system piles on top of this is relevant, but not the point when discussing the Fed.
Nope, again. The growth of the money supply (reserves and cash) is a response to increasing demand. Private banks lend first, and only later look for reserves, if they have to. Prior to the financial crisis, asset prices grew, as well as the financial sector in general, without any comparative growth in reserves.

Originally Posted by Tippit
Lol. None of that credit would have existed a) without the Fed creating base money originally and b) if a private bank didn't conjure it on demand.
You do realize that [a] is mainly a response to [b]?

Originally Posted by Tippit
So what? Shadow banks like hedge funds prove my case even more. They don't get to use the special accounting rules or benefit from fractional reserve banking, yet they have access to so much credit from the Fed that they can circumvent the traditional banking system entirely! Everyone knows, for instance, that Citadel hedge fund is a front for the Federal Reserve.

Money matters. Pinhead economists that pretend that it doesn't are wrong.
No, it proves how shadow banking and the whole financial sector (including asset price responses) managed to grow enormously without direct provision of funds by central banks. Money matters, and private money and leverage did matter even more prior to the crash.
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Old 22nd October 2017, 02:52 AM   #174
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Originally Posted by psionl0 View Post
It's no mystery. Speculators and other property investors increase the demand for property and increased demand results in higher prices. If speculators are going to buy properties to rent out then they expect a decent return on their investment so they will charge higher rents which individuals who need a roof over their head have little option but to pay.
This implies a monopoly or something approaching it. I'm not seeing that.
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Old 22nd October 2017, 02:54 AM   #175
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Originally Posted by Tippit View Post
That's what bailouts are for. To socialize the losses of connected cronies by papering them over with counterfeit money. What else do you call the Fed's buying a worthless asset for 100 cents on the dollar?
How much did the Fed write off?

What you describe is not a feature of fractional reserve banking, though.
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Old 22nd October 2017, 03:32 AM   #176
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Originally Posted by GnaGnaMan View Post
This implies a monopoly or something approaching it. I'm not seeing that.
Then read Tippit's explanation. As individuals get priced out of owning a home, the demand for rental properties increases.
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Old 22nd October 2017, 03:58 AM   #177
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Originally Posted by psionl0 View Post
Then read Tippit's explanation. As individuals get priced out of owning a home, the demand for rental properties increases.
But the supply of rental properties also increases. Is the idea that property is just bought up and then left fallow; thus reducing supply?
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Old 22nd October 2017, 04:06 AM   #178
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Originally Posted by GnaGnaMan View Post
But the supply of rental properties also increases.
Does it?
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Old 22nd October 2017, 04:22 AM   #179
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Originally Posted by psionl0 View Post
Does it?
That was my question to you. I don't think you have thought this through.
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Old 22nd October 2017, 04:38 AM   #180
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Originally Posted by GnaGnaMan View Post
That was my question to you. I don't think you have thought this through.
It sounded like a sweeping statement rather than a question to me.

It's hard to increase the number of properties. Zoning density changes take time as does new building activity. It may be a little easier in far flung suburbs and the excessive commute time is reflected in slightly lower prices. But in more desirable locations supply increases very slowly - much too slowly to limit asset price inflation.
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Old 22nd October 2017, 04:56 AM   #181
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Originally Posted by psionl0 View Post
It sounded like a sweeping statement rather than a question to me.

It's hard to increase the number of properties. Zoning density changes take time as does new building activity. It may be a little easier in far flung suburbs and the excessive commute time is reflected in slightly lower prices. But in more desirable locations supply increases very slowly - much too slowly to limit asset price inflation.
If someone buys a home they won't live in then they will either rent it out or leave it empty. I asked if the latter should be assumed. If the latter is not the case then the purchase increases the available rental property even while someone is priced out of home ownership.
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Old 22nd October 2017, 05:09 AM   #182
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Originally Posted by psionl0 View Post
As individuals get priced out of owning a home, the demand for rental properties increases.
Though the rental price is always higher than then monthly payment of a house loan would be.

Originally Posted by psionl0 View Post
Have I (not Tippit) ever said anything else?
I have a less clear idea of what your dogma is than what Tippit's dogma is: abolish the central banks, and quit creating any new money into circulation, and... uhh... was it so that central banks (which just got abolished, though) should hoard tons of gold and revalue it to equal the size of economy.

Which reminds me that nobody ever answered this question: Why use any reserve at all (such as gold reserve), why not simply agree that the total amount of money in society is X, end of topic?
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Old 22nd October 2017, 05:35 AM   #183
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Originally Posted by GnaGnaMan View Post
If someone buys a home they won't live in then they will either rent it out or leave it empty. I asked if the latter should be assumed. If the latter is not the case then the purchase increases the available rental property even while someone is priced out of home ownership.
You can deny the laws of supply and demand all you like but it doesn't change the objective data. The cost of buying and renting a home has risen much faster than other prices and other than individuals who are fortunate enough to already own their own home, the benefits are accruing to the wealthy and others are paying the cost.

If you have an alternative theory for why this is happening then please enlighten us.
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Old 22nd October 2017, 05:41 AM   #184
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Originally Posted by JJM 777 View Post
I have a less clear idea of what your dogma is than what Tippit's dogma is: abolish the central banks, and quit creating any new money into circulation, and... uhh... was it so that central banks (which just got abolished, though) should hoard tons of gold and revalue it to equal the size of economy.
If that is what you call a "clear idea" of Tippit's dogma then I have NO chance of explaining anything to you.

Originally Posted by JJM 777 View Post
Which reminds me that nobody ever answered this question: Why use any reserve at all (such as gold reserve), why not simply agree that the total amount of money in society is X, end of topic?
That's because nobody asked the question. However, Tippit is arguing that the total supply of money should be fixed. He just wants gold to be money to ensure that it is.
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Old 22nd October 2017, 06:17 AM   #185
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Originally Posted by psionl0 View Post
You can deny the laws of supply and demand all you like but it doesn't change the objective data.
What do you see as denying the laws of supply and demand? I have no idea what you are talking about.

Quote:
The cost of buying and renting a home has risen much faster than other prices and other than individuals who are fortunate enough to already own their own home, the benefits are accruing to the wealthy and others are paying the cost.
I am not sure I understand what you are trying to show with this. Why don't you try to present a coherent argument.

What I have so far is:
1)The Fed basically gifts money to super-rich people. I don't think I understand this bit quite right.

2) The super-rich use this money to buy assets, including real estate. I' m not sure why the super-rich bother would do this. At first I thought it was about making a profit but I'm no longer sure.

3) Somehow they manage to also hoard the gift-money they spend on assets so that consumer prices don't rise. I'm really hazy on how that's supposed to work.

4) This causes rents to rise for reasons that are not revealed. I really don't want to guess here.
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Old 22nd October 2017, 07:16 AM   #186
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If you conflate my posts with those of Tippit's you will never get a coherent argument.
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Old 22nd October 2017, 09:03 AM   #187
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Originally Posted by Tippit
That's what bailouts are for. To socialize the losses of connected cronies by papering them over with counterfeit money. What else do you call the Fed's buying a worthless asset for 100 cents on the dollar?
Originally Posted by GnaGnaMan
How much did the Fed write off?
Not much, because the Fed has actually made a hefty profit on those assets… hence, the Fed has remitted to the U.S. Treasury a whopping $742.3 billion since the financial crisis (2007-2016).
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Old 22nd October 2017, 10:20 AM   #188
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Originally Posted by lupus_in_fabula View Post
Nope. Did you simply conjure that up?

First of all: swap lines are between central banks, and they do show up on their balance sheets.
Now you're obfuscating. The foreign currency received in the swap purportedly shows up on the Fed's balance sheet (or maybe not, see the $9 trillion in off-balance sheet assets cited by Bloomberg). Either way, you linked a graph of member bank balances, which are US member banks. Any dollars created in exchange for foreign bank swaps won't show up there. Nice try though.

Quote:

Secondly, the Fed and other central banks opened the current swap lines as a response to the financial crisis because there wasn't any direct dollar liquidity funding available. Prior to the financial crisis, as documented by BIS, non-US banks' claims on the US official sector in terms of Federal Reserve funds (reserve balances) was effectively zero.
Yes, you don't have to lecture me on what I already know. The Fed created a ****-ton of money to bail out its cronies.

Quote:

So the great irony in all this is that the Fed had to open swap lines with other central banks because there was a shortage of direct liquid dollar funding… i.e., the opposite of your erroneous claim (where you say asset prices grew because of the Fed providing reserves to foreign banks, even prior to the crisis).
Look, you aren't fooling anyone. Everyone knows the meteoric rise in asset prices is due to the Fed's free funny money. Since 2009, the Fed has unleashed a global short volatility trade which has resulted in no less than $3.8 trillion dollars of share buybacks, $1.4 trillion in implicit short volatility, and $60 billion in explicit short volatility.

http://www.zerohedge.com/news/2017-1...-broken-market

The entire US equity market has been rigged for a decade or more.

Quote:

Nope, again. The growth of the money supply (reserves and cash) is a response to increasing demand. Private banks lend first, and only later look for reserves, if they have to. Prior to the financial crisis, asset prices grew, as well as the financial sector in general, without any comparative growth in reserves.
The fact that banks aren't fully levered is irrelevant to the fact that increasing the supply of money and credit results, and has resulted in asset price inflation. The fact that central banks have debased the money supply to such a degree that member banks have unprecedented ability to lend (and are choosing not to lend to ordinary people), and that the limits of the fractional reserve system are now irrelevant, is also irrelevant.

Quote:

No, it proves how shadow banking and the whole financial sector (including asset price responses) managed to grow enormously without direct provision of funds by central banks. Money matters, and private money and leverage did matter even more prior to the crash.

In other news, black is white, up is down. Ben Bernanke works for Citadel now. I'm so sure they're not connected to the Fed.
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Old 22nd October 2017, 10:25 AM   #189
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Originally Posted by lupus_in_fabula View Post
Not much, because the Fed has actually made a hefty profit on those assets… hence, the Fed has remitted to the U.S. Treasury a whopping $742.3 billion since the financial crisis (2007-2016).
What does "profit" even mean for an entity that can create an infinite amount of money ex nihilo? The Fed provided trillions in bailouts for banks and insurance companies that should have failed miserably, and left their executives penniless and in jail. And you're bragging about "profits" created by an entity that is "nationalizing" the bad assets of failed banks in a crisis with counterfeit money? Please.
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Old 22nd October 2017, 11:00 AM   #190
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Originally Posted by psionl0 View Post
If you conflate my posts with those of Tippit's you will never get a coherent argument.
Ok. What argument would I get if I didn't?
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Old 22nd October 2017, 11:39 AM   #191
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Originally Posted by GnaGnaMan View Post
Ok. What argument would I get if I didn't?
You didn't get a simple post about the laws of supply and demand so I don't know.

All that stuff about the Fed gifting "money to super-rich people" came from Tippit. Any critical thinker would realize that none of my posts support any Fed conspiracy theory.
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Old 22nd October 2017, 12:24 PM   #192
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Originally Posted by psionl0 View Post
You didn't get a simple post about the laws of supply and demand so I don't know.
I did think you might not know how supply and demand work but I did not want to jump to such an unfavorable conclusion.

Quote:
All that stuff about the Fed gifting "money to super-rich people" came from Tippit. Any critical thinker would realize that none of my posts support any Fed conspiracy theory.
You inserted yourself in an exchange between myself and Tippit. I filled in the blanks in your assertions with Tippit's claims. I understand that you have not made any coherent argument at all.
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Old 22nd October 2017, 12:44 PM   #193
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Originally Posted by GnaGnaMan View Post
I did think you might not know how supply and demand work but I did not want to jump to such an unfavorable conclusion.
You even interpreted that simple sentence wrong.

Originally Posted by GnaGnaMan View Post
You inserted yourself in an exchange between myself and Tippit.
I didn't realize that this was a private conversation between you and Tippit.

Originally Posted by GnaGnaMan View Post
I filled in the blanks in your assertions with Tippit's claims.
So you admit that you fraudulently attributed comments by Tippit to me (and to fill in non-existant "blanks").

Originally Posted by GnaGnaMan View Post
I understand that you have not made any coherent argument at all.
You have demonstrated that you understand nothing at all. You had to change all the words in my posts in order to argue against me.
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Old 22nd October 2017, 12:47 PM   #194
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Originally Posted by Tippit View Post
Yes, you don't have to lecture me on what I already know. The Fed created a ****-ton of money to bail out its cronies.
The Fed loaned money and was repaid with interest, a net gain to the US treasury.

Originally Posted by Tippit View Post
Look, you aren't fooling anyone. Everyone knows the meteoric rise in asset prices is due to the Fed's free funny money. Since 2009, the Fed has unleashed a global short volatility trade which has resulted in no less than $3.8 trillion dollars of share buybacks, $1.4 trillion in implicit short volatility, and $60 billion in explicit short volatility.
http://www.zerohedge.com/news/2017-1...-broken-market

Zero Hedge is a crap source.

https://mediabiasfactcheck.com/zero-hedge/

Originally Posted by Tippit View Post
The entire US equity market has been rigged for a decade or more.


Originally Posted by Tippit View Post
The fact that banks aren't fully levered is irrelevant to the fact that increasing the supply of money and credit results, and has resulted in asset price inflation. The fact that central banks have debased the money supply to such a degree that member banks have unprecedented ability to lend (and are choosing not to lend to ordinary people), and that the limits of the fractional reserve system are now irrelevant, is also irrelevant.
The Fed's actions were (among other things) to prevent the money supply from shrinking, which would have been economically disasterous.

Banks certainly are lending to ordinary people.

Originally Posted by Tippit View Post
In other news, black is white, up is down. Ben Bernanke works for Citadel now. I'm so sure they're not connected to the Fed.
Non-sequitor.
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Old 22nd October 2017, 12:53 PM   #195
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Originally Posted by GnaGnaMan View Post
But the supply of rental properties also increases. Is the idea that property is just bought up and then left fallow; thus reducing supply?
The supply of rental properties increasing doesn't change the punitive aspects. If I steal a car the fact that a factory will produce another one doesn't change the fact that I stole the car. The bottom line is that money creation results in regressive wealth transfer.
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Old 22nd October 2017, 01:26 PM   #196
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Originally Posted by Mycroft View Post
The Fed loaned money and was repaid with interest, a net gain to the US treasury.
Great. So we can abolish the for-profit, for private-benefit Fed, give Treasury the power to create money ex nihilo, and then let them create infinite "profit". Sounds like a plan.

Quote:

Zero Hedge is a crap source.

https://mediabiasfactcheck.com/zero-hedge/
Reverse appeal to authority is a logical fallacy. You either read the article and deal with the facts, or you don't. Remember when I said you were devoid of logic?
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Old 22nd October 2017, 07:45 PM   #197
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Originally Posted by Tippit View Post
Great. So we can abolish the for-profit, for private-benefit Fed, give Treasury the power to create money ex nihilo, and then let them create infinite "profit". Sounds like a plan.
There is no relationship between this and what it was supposedly in response to.

Originally Posted by Tippit View Post
Reverse appeal to authority is a logical fallacy. You either read the article and deal with the facts, or you don't. Remember when I said you were devoid of logic?
Some sources are better than others, and Zero Hedge is kooky and prone to conspiratard nonsense. It’s run by a guy, Daniel Ivandjiiski, who for whatever reasons, wants to promote a consistently gloomy vision of a world economy constantly in crisis and on the brink of collapse.

The specific article you're citing doesn't say anything and seems to be random bits of jargon strung together with meaningless charts and spiced with adjectives chosen for their ability to induce anxiety. If there are fact there that support your argument, or even just plain facts, they’re coincidental.

Here, learn for yourself.

https://www.forbes.com/sites/timwors.../#417673fc437a

http://money.cnn.com/2014/09/25/inve...-blog-finance/

And my personal favorite; from an interview with a disgruntled former writer for the site:

"I tried to inject as much truth as I could into my posts, but there's no room for it. "Russia=good. Obama=idiot. Bashar al-Assad=benevolent leader. John Kerry= dunce. Vladimir Putin=greatest leader in the history of statecraft," Lokey wrote, describing his take on the website's politics.

<snip>

"I can't be a 24-hour cheerleader for Hezbollah, Moscow, Tehran, Beijing, and Trump anymore. It' s wrong. Period. I know it gets you views now, but it will kill your brand over the long run," Lokey texted Ivandjiiski. "This isn't a revolution. It's a joke."
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Old 22nd October 2017, 09:45 PM   #198
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Originally Posted by Mycroft View Post
There is no relationship between this and what it was supposedly in response to.
Yes there is. You just lack the cognitive ability to grasp it, which is unfortunate because it's a really simple concept. In 1913 the Federal Reserve Act gave the Fed the exclusive monopoly on money creation. If the goal is for Treasury to make a "profit", then why do we need the Federal Reserve at all? Just grant the exclusive right of money creation to the Treasury, and let them monetize their expenses directly. It makes a lot more sense then delegating the monopoly of money creation to some quasi private cartel of private bankers.

Quote:


Some sources are better than others, and Zero Hedge is kooky and prone to conspiratard nonsense. It’s run by a guy, Daniel Ivandjiiski, who for whatever reasons, wants to promote a consistently gloomy vision of a world economy constantly in crisis and on the brink of collapse.

The specific article you're citing doesn't say anything and seems to be random bits of jargon strung together with meaningless charts and spiced with adjectives chosen for their ability to induce anxiety. If there are fact there that support your argument, or even just plain facts, they’re coincidental.
That's still not an argument. I must conclude that you don't even understand what the article is about, which I suppose is possible, since it is somewhat technical.
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Old 22nd October 2017, 09:49 PM   #199
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http://www.artemiscm.com/welcome#research

Presto, there is a link with nothing to do with zerohedge, since ZH is mostly a news aggregator. I suspect you still won't be able to follow the subject matter though. But that's ok, we can just ignore each other.
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Old 22nd October 2017, 11:25 PM   #200
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Originally Posted by Tippit
Now you're obfuscating. The foreign currency received in the swap purportedly shows up on the Fed's balance sheet (or maybe not, see the $9 trillion in off-balance sheet assets cited by Bloomberg). Either way, you linked a graph of member bank balances, which are US member banks. Any dollars created in exchange for foreign bank swaps won't show up there. Nice try though.
The irony never stops.

#1: You're accusing me of obfuscating while, at the same time, referring to an article that turned out to be completely botched. The figures used (later revised, btw.) was a calculation of all potential contingencies going wrong for all the relevant public sector programs – including tax cuts, TARP (Bush), ARRA (Obama), FDIC, and all the Fed's programs such as Maiden Laine, MBS and GSE purchases. That is, if all programs took the maximum loss (conceivable), you might end up with such a figure as reported; i.e., about the double of the actual balance sheet figures.

Notice how Bloomberg's revised figures a few months later also show what it's all about: that is, comparing actual balance sheet transactions/amounts with the maximum theoretical ones, i.e. amounts outstanding vs. program limits.

That's why the theoretical ones are off balance sheet; that's also why it's not even about any actual transactions; and that's why the actual transactions performed are reported as amounts on the balance sheet. Mind you, that not one of the Fed's emergency programs made a loss: in fact, instead, they have generated profits (which to a large extent has been remitted to the Treasury every year since the start of the programs… a total of $742.3 billion… the figure you also seem to be confused about).

#2: You want to draw attention to something which happened after the financial crisis (and which you managed to err in as well) when then issue under consideration was the Fed creating money for non-US banks prior to the financial crisis – as an explanation for asset prices going up and peaking at 2000 and 2006.

Now who's obfuscating here?

Originally Posted by Tippit
Look, you aren't fooling anyone. Everyone knows the meteoric rise in asset prices is due to the Fed's free funny money. Since 2009, the Fed has unleashed a global short volatility trade which has resulted in no less than $3.8 trillion dollars of share buybacks, $1.4 trillion in implicit short volatility, and $60 billion in explicit short volatility.
Again, what about 2000 and 2006? May I suggest there's a big black hole in your somewhat naïve story?

Originally Posted by Tippit
The fact that banks aren't fully levered is irrelevant to the fact that increasing the supply of money and credit results, and has resulted in asset price inflation. The fact that central banks have debased the money supply to such a degree that member banks have unprecedented ability to lend (and are choosing not to lend to ordinary people), and that the limits of the fractional reserve system are now irrelevant, is also irrelevant.
No, the private financial sector managed to increase private money and leverage just fine without any meaningful or comparable rise in the money supply (reserves and cash). Your unfounded escapade into foreign bank and later off-balance sheet territory does not change that simple fact.

The whole financial assembly which spectacularly came crashing down was an attempt to build a financial system structured on private sector safe assets (securitization), leverage and liquidity. Define shadow banking as money market funding of capital market lending and you begin to understand why the crisis started with a run on the money market rather than on deposit banks, and why it was about lack of public sector liquidity, such as reserve balances, rather than abundance of it which brought down the whole structure. It was never built on central bank liquidity to begin with. That's why we now, after the great financial crisis, find central banks, particularly the Fed, in the odd position of not only being a lender of last resort but also a dealer of last resort.

Public sector institutions have taken over parts of the financial structure that emerged after the 1980s because the critical global private sector components failed.
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