201506.29
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Anecdotes on Eurodollar ‘Money Supply'; A Final Supplement

While this was meant to be anecdotal, giving the whole rise and fall of eurodollars an actual feel through actual published bank results, the more abstract collections of the derivatives world conforms very well with those singular sketches in JP Morgan and Goldman Sachs. The BIS, for example, publishes its estimates for the give and…

201506.29
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Anecdotes on Eurodollar ‘Money Supply'; Part 4

The early 1990’s saw the S&L’s fail on wholesale means but also to be displaced entirely by the GSE’s and securitizations of also wholesale monetarism. Indeed, when LTCM failed in 1998 rather than recognize the glaring limitations evident in the systemic pathology the Fed looked at it the way it wanted, preserving itself at the…

201506.29
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Anecdotes on Eurodollar ‘Money Supply'; Part 3

In April 2013, Janet Yellen gave a speech still as the Vice Chair of the Federal Reserve. Her topic was communication, fitting in that it was given to the Society of American Business Editors and Writers. She expressed the evolution in Fed policy as it had changed since the more direct if silent beginnings in…

201506.29
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ECB, Monetarism and a Greek Half-Decade

Greece really should not matter, at all, outside of the tragic plight of the Greeks themselves. You’ll see that message echoed particularly inside the US where the status quo takes a contradictory turn toward reasonableness in order to justify further what isn’t. This is all about asset prices and how they have been so skewed…

201506.28
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The Market Waits For No One

Our lens suggests that the very low interest rates that have prevailed for so long may not be “equilibrium” ones, which would be conducive to sustainable and balanced global expansion. Rather than just reflecting the current weakness, low rates may in part have contributed to it by fuelling costly financial booms and busts. The result…

201506.28
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On the Doorstep of a Fed Rate Hike Cycle

The Fed has weighed in with their opinion of the economy. Given their economic assessment, they have presented their opinion of the appropriate level for interest rates. Interestingly, investors don’t seem to be of the same opinion as the committee on the appropriate level for rates or the timing of upcoming interest rate moves. Perhaps…

201506.26
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Anecdotes on Eurodollar ‘Money Supply'; Part 2

What I set about to demonstrate in Part 1 was the visible spectrum of the wholesale system. In other words, you can see balance sheets grow and distort, with money dealing along with it, but that doesn’t cover the full dimensions on how and why credit production, especially through securities, bloomed as it did. This…

201506.26
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Anecdotes on Eurodollar ‘Money Supply'; Part 1

I often write about the rise and fall of the eurodollar standard in very abstract terms, largely because most of what occurs there is hidden, opaque and/or terribly abstract. The difficulty is in trying to define and describe “money” under just such a pliable system, a task not easily solved by current conventions. For instance,…

201506.25
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Santa Claus in Sweden

Just a few weeks ago the Swedish central bank, Riksbank, was being lauded for its courage and action in finally embracing QE as the ECB had done. The deflation problem in Sweden had been, so it is asserted, seemingly intractable and thus forcing the monetary hand once more. Riksbank has never been shy about fine-tuning…

201506.24
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The ‘Dollar’ Is Itself Disturbed

Yesterday, I briefly surveyed the outward credit risk portion of the “dollar” financing process, so it makes sense to update interbank risk. As you might expect, given hints of redrawing liquidity and a “dollar” disruption, interbank rates jumped in the early part of June. Even the federal funds rate (effective) moved up to 14 bps,…