The Life Cycle of Money
doap.metal.bohyen.space
doap.metal.bohyen.space
Since this is one of my favourite rabbit holes: Pozsar's inside money vs outside money framework is useful for understanding why the fragilities described here aren't just theoretical (1) More on the repo plumbing specifically (2).
(1) https://philippdubach.com/posts/pozsars-bretton-woods-iii-th...
(2) https://philippdubach.com/posts/repo-might-be-even-bigger-th...
>Freezing Russian reserves in 2022 introduced confiscation risk to assets previously considered risk-free
Is this actually new? Didn't we freeze Iranian assets back in 1979? Wouldn't be surprised if there were other examples.
And yet: LLMs are writing entirely based on human input. Presumably there exists a great quantity of median representative text, some lowest-common denominator, of humans who write similarly to these heuristics.
(In particular: why are LLMs so fond of em-dashes, when I'm not sure I've ever seen them used in the wilds of the internet?)
More seriously, if you want to learn money and its infrastructure, I recommend Banque de France's book on the matter "Payments and market infrastructures in the digital era" https://www.banque-france.fr/system/files/2023-04/payments_m...
This part is wrong. In the US scenario, the government either issues bonds (creating money) or it moves its reserves at the central bank, bringing money into circulation. Money outside of circulation effectively doesn't exist, so this effectively creates money.
Money relationships between two parts of the same entity should not be counted as money. Otherwise I can become a trillionaire by lending myself a trillion.
The deficit-surplus identity seems to only hold if the federal reserve is considered part of the government.
> The Fed’s balance sheet expands. It has more assets and more liabilities. This is not "printing money" in the colloquial sense; it is creating electronic reserve accounts that banks can use for lending or other purposes.
Except you just said money is a relationship on balance sheets. Larger balance sheet = more money. Perhaps the dispute is over the word "printing", since creating money doesn't involve a printer.
I like the section about money moving. Those of us in the cryptocurrency ecosystem see the clear parallels. When Bitcoin is used to pay for something priced in Ethereum, the bitcoins don't leave the Bitcoin network - they end up at a trader who releases the same value of ethers on the Ethereum network.
When the world's largest creditor starts rebalancing toward domestic assets, the marginal Treasury buyer becomes a marginal seller. Wrote a short piece on this in Jan: https://philippdubach.com/posts/big-in-japan/
My question is, what would a "printing money" look like, hypothetically? I feel like comparing the real to the hypothetical would help me understand the difference by highlighting the contrast.
Printing money, in the "normative" sense is printing pieces of paper that has a certain picture and number on it and thats about it.
When the US treasury "prints money", its issuing debt. Yes the money supply increases, but its backed by "something", rather than "just" toilet paper with pictures and number on it.
Because it's BS. In the modern fiat system the most basic form of money printing is expansion of the central bank's balance sheet. It creates the "base money". Sure, technically the government issues debt to "borrow" the new money, but everyone familiar with the system understands the the debt will never be paid out in the classical sense and it will be just re-financed by future expansion of the central bank's balance sheet. So the end effect is the same: new units of the base money enter circulation contributing to inflation.
But there are other forms of "money printing" as well. Every time a bank issues a credit, in a certain sense, it also "prints money". As long as the bank system functions as usual, it's indistinguishable from the printing done by the government+central bank. This is why bank de-regulation can have the same effects as the classical money printing, but with additional risks of potential credit contraction caused by bad loans (though they are minimized by central banks more often than not...).