0 sats \ 0 replies \ @netstatic 17 Aug 2023 \ on: Teach Me Daddy | Arthur Hayes bitcoin
Felix Zulauf's face reading this post calling him daddy 😂: 🤨
Pre-pandemic, the reserve ratio requirement hovered between 3% to 10% – resulting in a 33x to 10x money multiplier for US commercial banks – but the Fed has since slashed it to 0%, meaning that commercial banks can lend out 100% of the deposits they receive with no obligations to hold any of those deposits as a safety net
People always ignore the Basel capital requirements. Still, having a 0% reserve ratio is pretty bad.
So the RRP balance has recently decreased, as has the TGA – begging the question: are the NY Fed and the Treasury actively using the RRP and TGA levers to work against the Fed’s current stated policy of fighting inflation by reducing the quantity of money?
If he thought that was strange back then for the TGA, he should take a look now. The RRP balance was never that low considering he posted this last year.
TGA: https://fred.stlouisfed.org/series/WTREGEN RRP: https://fred.stlouisfed.org/series/RRPONTSYD
I don’t have an answer to these questions, but there is always a strong political will among the ruling party to generate favourable short-term economic conditions before an election so that party members can keep their jobs. They are human, after all.
And now we have a debt ceiling suspension.
Each date corresponds to a local top or local bottom – and the timing is uncanny.
I'm a bit wary of relying on trends with a relatively low number of data points, but it's for sure interesting.
Risk assets like Bitcoin and stonks have responded positively to rising USD liquidity, even though the price of money has increased. So currently, it would appear that the performance of financial assets is more contingent on the quantity of money than the price.
I also found this interesting/confusing. With the theory of quantity being more important than price, I guess this would work out (especially because we have similar conditions of rising stock valuation while in a supposedly intense QT period)
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