Gold collapsing. Bitcoin UP.

[Zarathustra]

you've always made this argument and i may be only beginning to understand it. it's a good one. but let's play a thought experiment though: UST's, which the Fed prints dollars to buy, are priced in dollars. dollars though are just dollars as they are the fundamental currency unit against which everything else, including bonds, are priced against. if the entire US bond mkt went to zero in terms of dollar prices in a severe calamity and loss of faith in the USG, the dollars themselves would still be there but the bonds wouldn't. what's your response to this?

The balance sheets of the banks and central banks then would collapse/shrink, which means, the sum of debt (money) would collapse and the result would be hyper-deflation.

Steve Keen on QE and the money multiplier myth:

Now what about the idea that banks can—and should—lend out the excess reserves that QE has created for them? How does that idea look in a double-entry bookkeeping table? In a word, it looks impossible.

The first stage is the Central Bank makes a loan to the Private Bank—say of $1 million. That is shown in Table 2, and at this point the accounting is accurate. QE itself is both an asset for the banks, and a liability: they get the reserves from the Central Bank, and they are liable to return them to the Central Bank if it asks for them. So that row—“QE from Central Bank”—sums to zero as it should.

But “lending from reserves?”. If a bank lends its reserves, its assets fall: it has to make a negative entry in its Reserves column. But to show that the money has been lent to the public, you need a negative entry in the Deposits column as well. So the row sum for that operation in Table 3 is not zero, as it should be. The bank simply can’t lend out its reserves.

(...)

This is, if you’ll pardon the pun, the bottom line: reserves play no role in lending at all, regardless of QE. The “Money Multiplier” model is a myth.
But that myth is the basis of the attempt by Central Banks to rescue the world from the economic crisis. It’s little wonder that that rescue attempt isn’t going as smoothly as planned.

Hey Joe, Banks Can't Lend Out Reserves

I began another post critical of Joe Stiglitz’s analysis with the caveat that I like Joe. I’ll add to that that I respect his intellect too, both because he’s very bright—you don’t win a Nobel Prize (even in Economics!) without being very bright—and because compared to some other winners, he [...]

www.forbes.com

 

[cypherdoc]

The balance sheets of the banks and central banks then would collapse/shrink, which means, the sum of debt (money) would collapse and the result would be hyper-deflation.

but the monetary base would still exist.

 

[79b79aa8]

oh noez -- ABC puts up a fight!

Coin Dance

Coin Dance - Community-driven Bitcoin Cash statistics and services.

cash.coin.dance

 

[Zarathustra]

but the monetary base would still exist.

Yes, in the form of debt, but as Steve Keen shows, this is just a booking process between banks and central bank. It's like Zombie money that does not reach the economy. And if you look at the central bank/banks as one unity, it's a zero-sum game. It vegetates outside the economy and does not generate price inflation. You are right: Besides assets, which they can buy up themselves.

Large increases in bank reserves brought about through central bank loans or purchases of securities are a characteristic feature of the unconventional policy approach known as quantitative easing. The idea behind quantitative easing is to provide banks with substantial excess liquidity in the hope that they will choose to use some part of that liquidity to make loans or buy other assets. (Bernanke 2009, “The Federal Reserve's Balance Sheet: An Update”

What a folly this was—almost. The one out that Bernanke gives himself from pure delusional babble is the phrase “or buy other assets”—because that’s the one thing that banks can actually do with the excess reserves that QE has generated. (Steve Keen)

 

[cypherdoc]

You ignore that the Fed not only has been buying UST's but all sorts of debt instruments/swaps from regular banks, central banks, malls, shopping centers, Fannie/Freddie, and who knows who else. All that money seeps out into the economy.

 

[cypherdoc]

i forgot the Fed's asset purchases include MBS, CMO's, CMBS, and the Federal Home Loan Banks (agency debt), TALF which enables the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets. and now, for the first time ever, Muni's. In addition, the Federal Reserve expects to announce the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.:

The program will work through the Money Market Mutual Fund Liquidity Facility announced earlier this week and offers an expansion of what had been a financial crisis-era program authorizing purchases of other assets. Expanding into munis is something that did not happen during the crisis.

The Federal Reserve is expanding its asset purchases to include municipal bonds

Thus far, the central bank has limited its efforts to Treasurys and mortgage-backed securities.

www.cnbc.com

Federal Reserve announces extensive new measures to support the economy

The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time. The

www.federalreserve.gov

 

[AdrianX]

This interview gives a glimpse into the future and paints a clear picture of the past. It was made before the massive stimulus but it predicted it and what's coming. More polarization, intolerance, deflation followed by money printing to fight it.

It's started and you can tell it's happening by the increasing wealth gap violence and suffering.

 

[cypherdoc]

the Fed's USD pump as seen thru the eyes of UST's purchased; going parabolic:

 

[Zarathustra]

You ignore that the Fed not only has been buying UST's but all sorts of debt instruments/swaps from regular banks, central banks, malls, shopping centers, Fannie/Freddie, and who knows who else. All that money seeps out into the economy.

That's why I worte: "You are right: Besides assets, which they can buy up themselves."
And you ignore that it's debt creation. Zimbabwe cannot do that. If they could, they would.

This event showed just how many people are willing to do what they are told and sacrifice everything because "experts" told them what to do and they can't look or see for themselves.

"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety."

What is scary is 99% of the population wants that trade.


I am beginning to believe there is no best case and humanity stupidly shot itself in the foot in a manner which we may not recover from. I hope I am wrong, but believe we are in the process of passing the point of no return and have locked in a massive depression.

Massive depression is my best case scenario.

It looks more and more like trying to save a few sick old people who are already in a near-death situation at the expense of everyone. Peak decadence, peak idiocy. Nature is now cleaning up this decadent species.

 

[cypherdoc]

That's why I worte: "You are right: Besides assets, which they can buy up themselves."
And you ignore that it's debt creation. Zimbabwe cannot do that. If they could, they would.

yeah, but the bond issuers in many most cases NEVER have to buy the bonds back from the Fed; IOW, a freely printed new money spicket. that's why they call it a bailout with permanent new USD entering the economy:

 

[cypherdoc]

IOW, who is the biggest debtor to the Fed? answer: the USG in the form of UST's. who here thinks the USG will ever repay it's debt back to the Fed? NO ONE. thus, effectively we're on a never ending one way USD money pump that funds a larger and larger USG year after year who then turns around and pumps those USD's into the economy one way or another. usually bridges to nowhere.

 

[Zarathustra]

IOW, who is the biggest debtor to the Fed? answer: the USG in the form of UST's. who here thinks the USG will ever repay it's debt back to the Fed? NO ONE. thus, effectively we're on a never ending one way USD money pump that funds a larger and larger USG year after year who then turns around and pumps those USD's into the economy one way or another. usually bridges to nowhere.

Hey, Cypher, it's Capitalism! Capitalism is Debitism! Debt always grows, until it can't.
"Capitalism is a chain letter" Dr. Paul C. Martin

 

[cypherdoc]

debtism is the veneer; money printing is the reality.

 

[Zarathustra]

No, debt creation is the reality. Neither the government sector nor the private sector ever pays back debt.
It always grows, "endlessly until the end".

 

[cypherdoc]

you're ignoring the 8-10% of the money supply that is physical currency. that's printed for sure. and if you never have to pay back your debt by exchanging it for dollars from the Fed's printing press, it's money printing. look at the ever increasing monetary base and Fed balance sheets i showed you above.

 

[AdrianX]

thus, effectively we're on a never ending one way USD money pump that funds a larger and larger USG year after year who then turns around and pumps those USD's into the economy one way or another. usually bridges to nowhere.

The cycle of money printing is maintained so long as we have deflation. The FED's money is creating inflation to offset both supply-side deflation (innovation and progress) and demand-side inflation (malinvestment).

With CoV19 the cause of deflation has unmistakably shifted to demand-side deflation. The FED is in damage control to prevent all deflation including the benefits accredited to innovation and competition.

We are living in a system that is anti-capitalist.

What I predict is if the economy stays crippled and productive assets centralize with the Fed's cronies and things continue - we move towards dystopia. If the free market finds a way to innovate then we get more deflation and the Fed continues - the innovation path leads people towards bitcoin. The crony's central planning leads to a fate similar to any failed socialist country.

Fun times. even BTC could become fashionable.

 

[Zarathustra]

you're ignoring the 8-10% of the money supply that is physical currency. that's printed for sure. and if you never have to pay back your debt by exchanging it for dollars from the Fed's printing press, it's money printing. look at the ever increasing monetary base and Fed balance sheets i showed you above.

Banknotes are posted on the liabilities side of the central bank balance sheet, and banks paid back QE credits to the centralbanks the last years. But you are right, in the long run it's growing, and that's no difference to the broad money base (aka debt), which is growing too in the long run, endlessly until the end, as Paul C. Martin always said.

 

[cypherdoc]

what part of this balance sheet is normal or standard? it doesn't conform to any audit or regulations (note the gold stock which has never been and never will be audited as one definitively known glaring example). it's not held accountable by market forces b/c it has increasingly used overwhelming force (printing) to control the market. QE repays by banks are a drop in the bucket compared to UST debt that we know will never get repaid. taxpayers don't pay the interest on them, the USG just sells more UST's for freshly printed USD's to fund the interest:

Federal Reserve Balance Sheet: Factors Affecting Reserve Balances - H.4.1 - July 18, 2024

The Federal Reserve Board of Governors in Washington DC.

www.federalreserve.gov

 

[Zarathustra]

That is the capitalist standard. The law has never been the same for private people and the government. The system is backed by power and trust and contracts, not by commodites. Krugman: "Fiat money is backed by men with guns". That is the reality, whether you like it or not. Countries without economic and military power, without trust among the population (Zimbabwe) have no power to issue inflation-free money. They only can print paper, which leads to inflation. The West is still able to create trust and create/print credit. Not even Russia has this power. Ruble collapsing - western currencies up. The currencies compete on the world market.

 

[79b79aa8]

how many BCH mining nodes use BU software? does BU work directly with any miner/pool? are there any plans to implement a BU mining pool, as anticipated in the articles of federation?