Thursday, October 3, 2019

Learn Economics Topic Twenty Four

24. Economic Alchemy (Turning Lead Into Gold):

Keep in mind that scarcity of bonds happens when there simply aren't enough of them. Big deficits like Trump deficits create a different problem, a surplus of bonds, and/or a lack of cash, either due to systemic errors or due to banker shenanigans. However, to be clear, as we approach the zero lower bound, the problems for banks will increase, and they are fighting to stop the relentless flow toward negative interest rates. 

BIS Explains Repo but There Is More With the Banks

Obviously, Trump woke up a sleeping giant with the banks. He is still calling for lower rates from the Fed, which actually has a responsibility to keep the banks solvent, squeezing the Fed.

The Derivatives Monster Creates a Bull From Capital, Not Labor

As we approach zero lower bound toward negative interest rates, there is a dangerous combination of bank weakness and extra slow growth that will result. Siphoning off capital takes place as interest rates generally decline, and it is a dangerous game.

Will the Fed and Central Bankers Give Up Alchemy to Save the World?

The Fed and central banks engage in alchemy. You can see that it really works but it hurts the real society, and central banks need to give up this magical power. But will they?

The False Economy; R-Star Estimates Bleak

[President Donald Trump changed his mind from what was originally written in this article. He has gone for lower and lower interest rates, which are really a slow growth trap as we approach zero and negative rates. They only keep stocks going. But the original description was]: The discussion about the Fed policy is significant if only to illustrate that raising rates at the low end has had little effect on the long bond due to Greenspan's "conundrum."

Economists Reveal Massive Market Forces in Bonds Before and After QE

The interest rate on Treasuries is lower than it would otherwise have to be because part of the demand for Treasuries comes from their use as safe debt. Treasuries are essentially money.


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While I have supported some economic policy, it turns out that racism was a strong motivator for some of those policies. I oppose racism in all forms and prove my commitment by rejecting anything other than the Westphalia or Westfalia view of sovereignty, which is mutual respect for all nations by all other nations. 

Perverse sovereignty is as bad or even worse than excesses in globalization which gives banks power over governments. Both are ultimately bad for America. This blogger supports free trade and opposes a border tax. But government should be stronger in order to rein in big banks who abuse the people with toxic loans.

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