When the US prints money we steal from every person in the world who uses a Dollar backed currency. I’m not sure how much longer they will tolerate this. They’re already not buying our bonds…
really? Given that US treasury bonds have some of the lowest yield, it means that it must be currently being bought up (which pushes yield down).
Bonds from countries like argentina have yields at around 47% - because nobody would buy them otherwise as they are hugely risky. See http://www.worldgovernmentbonds.com/country/argentina/
Our bonds are cheap because we can offload them onto the Fed.
Side-note: The Chinese have to own treasuries because the US buys so much stuff from them. If they hurt the US currency relative to their own, then Chinese goods would become more expensive for Americans, and the US would buy less. That would not be good for an economy like China's that has a trade surplus with the US in the range of hundreds of billions of dollars per year. [2]
[0] - https://ticdata.treasury.gov/Publish/mfh.txt
[1] - https://www.bloomberg.com/news/articles/2021-04-15/china-s-h...
[2] - https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...
AFAICT:
* US federal debt held by Fed Reserve Banks: $5.6T
* US debt held by foreign and international investors: 7T
* Debt held by private private investors: 17T
See, which while having a "2018" URL, has an up-to-date embedded graph:
* https://fredblog.stlouisfed.org/2018/04/whos-buying-treasuri...
17+7+5.6=29.6. 5.6/29.6 = 19%.
> That number is increasing every year.
It was rising up to 2014, then held fairly steady between 2014 and 2018, and then started decreasing until the drama of 2020 kicked in:
The vast majority of money that is created in modern credit-based economies is via bank loans, not central banks. Cullen Roche the very informative paper "Understanding the Modern Monetary System" ten years ago, and it's still relevant:
> In many market based systems such as the USA, the money supply is essentially privatized and controlled by private banks that compete to create loans which create deposits (money). Contrary to popular opinion, governments in such a system do not directly control the money supply nor do they create most of the money.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
* https://rationalreminder.ca/podcast/132
* https://www.youtube.com/watch?v=uZi4QE_EfCw
This is especially true in places where reserve requirement no longer exist, e.g., Canada got rid of them in the 1990s.
It's "only" up 31.76% since Fed 2020 / before they started messing around.
It was already regularly increasing by ~7% per year - so you'd expect close to a ~10% difference. So we've got about ~20% more M3 than you would otherwise expect.
If they're trying to cover up data, they're doing a bad job.
Regardless, 7% is already ridiculous, and over 20% beyond that is absurd.
Are you aware of the regulatory reporting change in regards to M1?
* https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
> […] but plenty of money is created by the Fed, and that number hit trillions in the last 18 months.
No: it, at most, creates bank reserve deposits:
> The story usually says that the Fed sets a quantity of reserves and banks then multiply those reserves into loans meaning that the Fed has a direct control over the quantity of money being created. But the financial crisis proved that this theoretical view is precisely backwards. In fact, banks make loans first and find reserves after the fact. In other words, the Fed accommodates the quantity of loans by supplying the necessary quantity of reserves. As a result, the money multiplier that we all learn in school is wrong and the Fed has no direct control over the quantity of loans/deposits issued meaning that the predominant form of money (deposits) is controlled almost entirely by private banks and not the Central Bank.
* https://www.pragcap.com/common-myths-about-the-federal-reser...
However, US reserve requirements were set to zero in March 2020, so banks could create loans more easily:
* https://www.federalreserve.gov/monetarypolicy/reservereq.htm
But there's nothing special about reserve requirements being zero: e.g., Canada has been at that level since 1992:
* https://en.wikipedia.org/wiki/Reserve_requirement#Canada
Just because the Fed reports on things like the various 'M' statistics does not mean that they have a large effect on them.
The private banking industry, through credit/loans, is where the majority of money is created. I direct you to Cullen Roche's paper "Understanding the Modern Monetary System", which is explains how things work in 2021, and not how they used to work in like 1921:
> In understanding inside money and outside money, one must also understand that it is the banks who “rule the monetary roost” so to say. That is, banks issue almost all of the money in circulation today in the form of loans and the government is designed primarily to support this privatized money creation source. Contrary to popular belief, the government does not issue or “print money” (except in the most literal sense, ie, the US Treasury prints notes to meet demand for use at private banks by bank customers who have accounts in inside money). The government is only the issuer of outside money which is designed to facilitate and support the use of inside money
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625
A good interview with Roche on the Rational Reminder podcast from a few months ago:
If the government sends people stimulus checks, pays for that with deficit spending, and that debt is monetized by the Fed purchasing it...
You had money that did not exist, that the Fed created on its spreadsheet to buy Treasuries to finance the Federal government... Sending people checks, unemployment, and businesses paycheck protection.
AFAIK, this was >$2T of the Federal Reserve's ~$7T balance sheet increase (~30%).
In normal times, the Federal government deficit spends, but the Federal Reserve's balance sheet does not increase to finance that.
Although the deficit is not paid for by taxes, the money created is not coming from the Federal Reserve.
In this case, almost all of it did.
The US will need to take out loans from the IMF, from China, from other nations in ASIA to buy e-yuan. China will pay us back in the dollars they have but will demand e-yuan for anything we want to buy from them. Now the Fed is enjoying its last hurrah. Printing money like its going out of style (which in fact it is) (Actually the Treasury prints the money but they wouldnt print unless the Fed issued bills and bonds to sell.)
When austerity hits home, the rich and privileged classes will have a new 'news bite' with which to beat the 'lazy unemployed'. Helicopter money will disappear. Austerity measures will include wage and price controls (like Nixon did in 1970s), sky high interest rates. And a booming underground economy as Americans learn to dodge taxes like the Greeks do. We will become like England. They were the host state to Arab oil money. We will see China buying up valuable parts of the US simply because we will have nothing else they want. Dont fool yourself, their weapons have reached parity withours. Their chip industry is at most 5 years behind ours. Their ML is at parity with 'ours' -facebook, google. OTOH, facebook and google might just move to china for the free-er capitalism they will have.
^This is my biggest concern.
Thus far real estate has been my favorite investment. I assume though if interest rates go up peoples buying power and hence prices will go down. If I liquidate my investments I will owe taxes and I fear inflation will eat up the cash value.
Buy e-yuan? Leave the USA?
Why can't the dollar be the same?