211–219 of 219 posts
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"Show me the personal incentives, and I'll tell you the outcome." –Someone way the hell wiser than myself
It's Charlie Munger AFAIK
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Curious what others think. In my small real offline world, it seems this has caused people to get worked up about the sky falling a few times and then quit paying any attention to the sky or boy crying wolf at all. Which means when events actually happen that will have a large negative impact on their life or their descendants, they just don't care. Which then results in another metaphor - boiling a frog.
I'm just not sure what it could mean for a typical person, who does not participate in and is not familiar with the EUR/JPY foreign exchange market, to care about a story like this. Is there some financial decision I should be making based on this intervention? If we all got together and protested, might we convince Bessent to buy the euros back, and would that restore the status quo ante if he did? The few people wh…
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To me it seems that you are ideologically opposed to anybody having the leverage over Fed, and believe Fed has overpowered magic. There is no point repeating what maxglute wrote above. > So you admit that the Fed has this power but they just choose not to exercise it? Fed has the ability to buy as much treasuries as it wants. However, the power of that ability is limited, especially in situation like we are now, with…
By the way the final thing you appear to not be understanding is that the Treasury had to borrow money to buy those yen. What do you think gets issued when the US Treasury borrows money?
Where did I say that the treasure had to borrow money?
It creates money out of thin air. What I implied is that creating too much money raises inflation and reduces its credibility, i.e. it can't do it in an unlimited manner.
Propping up the yen may be more helpful for the US than if Japan hikes interest rates which is on the table (Google ’bring money home‘). The carry trade buying treasuries with debts incurred in yen has been a steady source for US funding. Eventually it will happen with collateral impact on treasury rates but this ‚supportive‘ move may just shift it past November.
Too. Big. To. Fail. I still have the tab (open from yesterday's /hn/) about Trickle Down Economics working as intended (which it obviously does, from a certain minority of the population's top-of-the-K-curve POV). Honestly, this is a good strategic move for USA lifestyle status quo , given Japan does still hold a massive amount of US bonds / debt obligations (even though in the past decade it has been lessening its e…
This isn't too dissimilar from when Spain plundered the new world for gold and silver. Which then inflated their local markets as there were only so many real goods to be bought, otherwise they paid off debt, and came out of that poorer and didn't have money to build ships. They were strong on paper until England challenged them.
US was strong on paper until it went after Iran. US is having it's Spain moment right now.
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> Literally no one benefits from the alternative. Future you might disagree with present you. But even if we disregard time, I think millions of consumers would benefit from the opportunity to have competitive markets again. If an actual economic forest fire was allowed to burn, we might eliminate some of the too-big-to-fail corruption and oligopoly that is the norm now and provide space for new seeds to grow.
You can’t have competition forever. At some point someone wins decisively, and then there is only the illusion of competition.
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I believe that would mean 5- year or 10- year , as in the terms of the bonds. No amount disclosed.
Yet the photo in Reuters article reads "bil."
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By the way the final thing you appear to not be understanding is that the Treasury had to borrow money to buy those yen. What do you think gets issued when the US Treasury borrows money?
You still have your blinders on. Where did I say that the treasure had to borrow money? It creates money out of thin air. What I implied is that creating too much money raises inflation and reduces its credibility, i.e. it can't do it in an unlimited manner.
The Treasury does not have the ability to "create money out of thin air." That is not how any of this works. The treasury, when it buys something, does so either by using tax receipts or by issuing bonds. The tax receipts are spent. The Treasury is issuing bonds.
The Fed could create money and use it to buy Treasury bonds on the open market, as part of its Open Market Activities to manage interest rates (which is exactly what it would do if the Japanese sold US treasuries)
Ironically, the law actually forbids the Fed from buying bonds directly from the treasury, so the treasury has to float the bonds and then have the Fed buy them off the open market if it chooses to do so. So again you can see how insane this move by the US Treasury is.
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You still have your blinders on. Where did I say that the treasure had to borrow money? It creates money out of thin air. What I implied is that creating too much money raises inflation and reduces its credibility, i.e. it can't do it in an unlimited manner.
You never said the Treasury has to borrow this money. I'm saying the Treasury has to borrow this money. The Treasury does not have the ability to "create money out of thin air." That is not how any of this works. The treasury, when it buys something, does so either by using tax receipts or by issuing bonds. The tax receipts are spent. The Treasury is issuing bonds. The Fed could create money and use it to buy Treasur…
To respond to your previous post:
I (naively?) thought that the Treasury had some Euro reserves lying around (like other central banks have USD reserves) and used those, not issuing new USD debt.
I agree that issuing new USD debt just to avoid the need for Japan to sell its USD debt (treasuries) would not reduce the pressure on USD debt.
Most probably it was mostly psychological market manipulation ('leaked' notes).