yasp

weed industry, ignoring federal law

> How else would your explain negative interest rates?

Um, central banks that are charging negative interest on reserves.

What amount of debt would doom us, Mr. Fisher?

Supply inelasticity. https://news.ycombinator.com/item?id=21028982

The increased supply of UST is another contributing factor, yes. Important point AFAICT is the supply inelasticity of repo funds.

From what I've been able to gather, there has been a decrease in demand for US Treasurys from certain segments of the market. This has resulted in primary dealers having to purchase the difference. They don't purchase USTs from cash on hand. Instead, they use the repo market to fund the purchase. However, the supply of repo market funds is relatively inelastic. Thus, you have a big spike in repo demand with a relatively fixed supply. This was causing the rate spikes we saw. Thus the Fed stepping in as lender of the last resort.

So the implication is that banks are hoarding excess reserves because they expect required reserves to be increased substantially in the future?

Regarding high quality liquid assets, wouldn't the collateral one would receive in a typical repo transaction qualify as such?

Any idea why the Fed discontinued data series #4 and what a good replacement for it is now?

How can reserves be too low when there are $1.4 T in excess reserves? How can repo rates spike to nearly 10% when the interest earned on those $1.4 T reserves only yields 1.80%?

edit: more questions. As I understand it, the "repo market" is broader than only banks. Why is it that the Fed performing repo operations will alleviate the liquidity issue in the repo market, unless it is some such bank borrowing in the repo market that is the cause of the problem? And given the point about the size of excess reserves, and the low yield they earn, is there any way for the repo rate to have spiked unless there were some bank that weren't able to muster adequate collateral?

Sell books.* [1]

* And securities! [2]

[1] https://tothestars.media/collections/sekret-machines

[2] https://static1.squarespace.com/static/5b5a458fe749405f83225...

Fear not, friend, for the IMF has a plan to drag us kicking and screaming below the zero-bound, whether the empirical evidence supports the prescription or not. https://www.imf.org/en/Publications/WP/Issues/2019/04/29/Ena...

Oh I see. I assumed the rates had spiked in the federal funds market, which also uses repos.

I was wonder the impression that banks could always borrow reserves from the Fed at e.g. 100 bps above the Fed funds rate target. Guess I was mistaken?

Why is that interesting?

"Not to spy on the US" does not preclude "spying in the US". Also, what of spying on US citizens? And also, what good are promises from intelligence agencies, for whom lying is an essential part of the craft, and for which repercussions are nil?

Some economists have started to publicly question whether negative rates don't also depress aggregate demand.

This time is different.

It's not, though. Hence why if you're more intelligent, you're more likely to be liberal. "Liberalism" is a set of values.

That entities are choosing to accept negative rates is certainly true (at least until paper currency is phased out, then it perhaps would be more debatable), but as far as I can tell, this is a nonsequitur. European banks are offering negative rates to savers because they are mandated to maintain reserves with the ECB, and the ECB is offering negative rates on reserves. The rate on reserves in turn drives the rate of inter-bank lending. So, it seems reasonable to me to ask what the market rate would be were the central bank not offering any interest on reserves, nor trying to set the rate of inter-bank lending, nor any similar rate. Would the market rate be negative, or zero, or slightly positive, or substantially positive? Have any economists taken a stab at the question? If not, why not?

I was under the impression that it is in consideration of population growth, so that per capita prices would stay the same.

Interesting, but why reveal now?

Interestingly enough, they seem to be related at a genetic level. [1]

For me, anxiety can trigger depressive episodes, but not vice versa.

[1] https://www.ncbi.nlm.nih.gov/pubmed/1514877

Related: https://www.schneier.com/blog/archives/2013/09/the_nsa_is_br...

Thanks, but several of the posts are password protected. I was wondering what the deal was with that. Googling didn't turn up a Patreon or some other way to get access. I guess they just aren't for the public?

How do I get access to the other pieces on this blog? This is great.

No, I did not. But society at large seems to.

If you're old enough to remember GWB being in office, contrast how people thought about him then (which was similar to Trump in a sense) to how they think about him now. In some new future republican administration, people may think similarly about Trump as they do now re: GWB.

Are you maybe thinking of what MMTers e.g. Warren Mosler assert? (E.g., Mosler calling for 0% interest rates, always.)

If you can think of source, please let me know. Sounds interesting.

Edit: It also sounds fallacious to me. Interest rates are central-bank determined because the central bank chooses to determine them. In the absence of a central bank controlling rates, there undoubtedly would still be interest rates. There ostensibly also still would be risk free rates. In some hypothetical parallel Earth, the Fed might instead choose to control the price of some other commodity, like oil. That doesn't mean that the price of oil would be "endogenous" and therefore that there's no market price. Just that the Fed had chosen to suppress that market price. Thus, as far as I can tell, it still makes sense to ask the question "what would be the market risk free rate?"

Not sure, but to your point even during the gold standard there was an element of fiat because the government mandated a convertibility with respect to gold.