21–30 of 81 posts
Earlier quoted context omitted.
They are not getting paid, because those are nominal interest rates, not real interest rates.
The original loan is fixed, other than the -1% interest which is basically a loan paydown gift. They pay back the nominal they borrowed. They are getting paid for risk-free paper shuffling.
The article says EU banks can borrow at up to -1%. The article also says, "put that cash into the Federal Reserve’s reverse repo facility, which allows banks to park cash for a return of 0.05%." They get paid to borrow and then paid to deposit what they just borrowed. Anyone see a problem with this risk-free infinite money mechanism?
The article explains the eurozone banks' rush from Euros to Dollars by the difference in interest rates. What puzzels me is that it should be the other way around when you take inflation into account: Euro central bank interest rates: -0.5 % [1] Euro inflation (Nov.): 4.9 % [2] This yealds a Euro netto interest rate of -4.95 % Dollar FED interest rates: +0.05 % [3] Dollar inflation (Nov.): 6.8 % [4] This yealds a Dol…
You're not taking into account the very real risk that the Euro doesn't exist in 5 or 10 or 20 years.
Many, many people in (PIGS)[1] do not appreciate being tied to the deutschemark.
[1] No offense meant.
Earlier quoted context omitted.
What’s the dollar milkshake theory?
It's a theory by wealth manager Brent Johnson that the next big recession will trigger an enormous demand for dollars. The dollar will rise against most other currencies and non-US bonds thus sucking up all the liquidity (that's the milkshake part). He's been on many podcasts to explain his theory and provide updates. I will link you an interview at realvision from september 2020 timestamped at 51:55 where he goes th…
She has a very good post about this same topic titled "The Global Dollar Short Squeeze":
https://www.lynalden.com/global-dollar-short-squeeze/
Recommended.
> The interest rates on three-month euro cross-currency basis swaps, in which one party borrows a currency and lends their own in return, have turned more negative in recent weeks. That means traders in Europe are paying a premium to exchange excess euros for dollars.
Demand for dollars is on a tear, sending the value of the dollar higher. You can see this in the DXY, an index of the dollar's value against a basket of other currencies:
https://www.tradingview.com/chart/?symbol=dxy
This inconvenient fact about the strengthening dollar is swept under the rug by those focused on inflation and their claims that the US is headed for 1970s stagflation at best, or Weimar 1920s hyperinflation at worst.
Also conveniently swept under the rug are the deeply negative yields on 10-, 20-, and 30-year treasuries.
And then there's gold, which has failed spectacularly as an inflation hedge. If the inflation threat is real, gold doesn't give a flip about it because the price hasn't moved in one year. For that matter gold is about the same price in nominal terms that it was ten years ago.
These three markets, gold, treasuries, and the dollar, don't fit the money printer go brrr narrative. What gives?
What gives is that the Fed isn't printing money and lacks the authority to do so. QE is not a printing press. It doesn't conjure money into being. QE can't cause inflation and its effects on long-term interest rates are questionable at best.
The dollar, debt, and gold markets are signaling that the next major move is toward slower growth and lower inflation. Maybe a lot lower.
Whatever the Fed announces or doesn't announce tomorrow is mostly theater.
Earlier quoted context omitted.
I never agreed for Federal Reserve to shovel free money to euro banks. When does the working class become a side in the equation of the purpose and value of stable money?
So unless I misread this, the Euro banks are lending the Fed a bunch of money and only asking for 0.05% interest?
EU banks get paid to take money/loan then get paid to deposit it. Regular people don't get access to this scam, which is ultimately paid by 6%+ commodity inflation felt by working class in USA.
Earlier quoted context omitted.
I never agreed for Federal Reserve to shovel free money to euro banks. When does the working class become a side in the equation of the purpose and value of stable money?
In this case it seems more like the ECB that's shoveling free money to the Euro banks.
Earlier quoted context omitted.
No. Both sides are getting what they wanted, at a price they set.
I never agreed for Federal Reserve to shovel free money to euro banks. When does the working class become a side in the equation of the purpose and value of stable money?
That's objectively not happening.
> When does the working class become a side in the equation of the purpose and value of stable money?
When employment becomes part of the Fed mandate.