Eurodollar University: Way Beyond Bank Reserves

The Crash of ’87 was a big deal, though not in the way most people remember. It was a stock market event, obviously, and those are the terms under which it has been understood. That’s not really its legacy, however, as the major shifts that began with Black Monday have had little and most often…


Bank Reserves Appendix; One Additional Case Study

Early last month, Deutsche Bank replaced one CEO pledged to paring back the bank’s ailing franchise with another committed to doing the same thing only more quickly. As I wrote at the time, “Cryan isn’t being ousted because he was wrong, but because he was right.” In comes Christian Sewing whose plans are starting to…


Bank Reserves Part 3; In Practice

There’s one final step to our examination of QE and bank reserves (you’ll need to read through at least Part 1, though Part 2 is worth the time, too). It’s all well and good to try and map out complex subjects using very simple models. That can help illuminate concepts, but we should always strive for…


Bank Reserves Part 2; If QE Was Really QT, Then Why Hasn’t QT Been QE?

Since we’ve already cracked open the accounting, it makes some sense to take our example into an important corollary examination (if you haven’t yet, you’ll need to read through Part 1). In our prior examples, we’ve assumed that the swap of risk-free assets on Bank A’s asset side is a neutral trade. That is, there…


Bank Reserves Part 1; The Great Tease

I completely understand the confusion regarding bank reserves. I really do. It’s easy to believe they are money because that’s what you’ve been taught from Day 1. Not only that, the same message is carelessly reinforced in the media every single time QE or any LSAP is referenced. Bank reserves are the aftermath of money…


EURODOLLAR UNIVERSITY: What Are Reserves To A Modern, Wholesale Money System?

It’s actually quite difficult to answer the question posed in the title, which in itself is a clue. What we know for sure is what does not count as reserves for a non-reservable currency system. It’s that contradiction that sets off the often graphic misconceptions. Quantitative easing has been described as printing money. That’s certainly…


Eurodollar University, Part 4 (MacroVoices)

Erik Townsend welcomes back Jeffrey Snider to MacroVoices for Part 4 of the Eurodollar University. Erik and Jeffrey discuss the failure of Primus and AIG back in 2008, the Gramm-Leach-Bliley Act, Henry Paulson and Glass–Steagall. They further discuss the Eurodollar system going parabolic in the 2000s, Banks manipulating regulations and the big picture end game…


Eurodollar University, Part 2

The folks at MacroVoices inform me that due to popular demand (yeah, I didn’t know, either) they are accelerating the scheduled releases. Part 1 played in late August, which you can find here. Part 2 will be available this Thursday. Though still in the early days, Part 2 really starts to get into the transformations…