djrichard

[djrichard @drjichard]

Fortunately the deficit doesn't matter.  Our trading partners would rather hoard the currency they buy from us by selling us goods.  Actually they would prefer to swap that currency for treasuries and hoard that instead, but same difference.

Same difference for the entities in the US that hoard the currency they buy from us by selling us goods and services.  Edit: or the banks in the US that hoard the currency they buy from us by renting us currency. And they too would prefer to swap the currency they've accumulated for treasuries so they can hoard that instead.

[djrichard @drjichard]

The Fed Gov simply rolls the debt over. Just take it further. When debt is about to mature, in advance of that the Fed Gov issues new debt to cover the debt that is maturing plus interest. And then pays that out. Net currency in = net currency out. And it's going to and from the same parties. The parties that would prefer to hoard treasuries instead of currency. So the interest doesn't matter. More ...

And for any spending, currency in = currency out as well. Currency in is split between taxes and debt issuance (assuming deficit spending). It's just in that case, the currency out doesn't go to entities that buy bonds. But the public that receives the spending, spends it quickly. And after being spent that currency eventually ends up in the hands of ... drum roll ... the entities that buy bonds. It's a virtuous cycle. More ...

Currently M3 = $20.8T. As long as a new round of deficit spending is << than M3, you're good. And that's not for the total deficit spending over the year. Because the velocity of money is in the basement. Consequently money spent by the Fed Gov ends up quickly in the hands of the entities that buy bonds (I.e. it doesn't take nearly a year), where it can be recycled back into more deficit spending within the same year. Bottom line, the Fed Gov has plenty of head room. Look at the head room the Fed Gov took advantage of for Covid. To simplify, the deficit doesn't matter.

[djrichard @drjichard]

@koshercockney Fortunately there's an easier way to get Israel to stop the genocide. Without resorting to rhetoric

[djrichard @drjichard]

@WSJ

[djrichard @drjichard]

@pati_marins64

[djrichard @drjichard]

@rustbeltmaga Per Gresham's law, bad governance chases out good. Still that doesn't mean Iran can't consider this option

[djrichard @drjichard]

@FortuneMagazine As Jesus said, "give unto Caesar what is Caesar's, give unto God what is God's"

[djrichard @drjichard]

@pati_marins64

[djrichard @drjichard]

@mtaibbi How about if we just tax their inheritance to reduce their free speech? I don't think anyone is looking to reduce the free speech of your off spring Matt.

[The Hormuz Letter @HormuzLetter]

BREAKING: Iran says the Strait of Hormuz will now remain fully closed even if the US fulfills all remaining MOU commitments, including the $300 billion reconstruction fund, frozen funds release, naval blockade removal and oil sanctions waivers, unless Israel fully and permanently withdraws from southern Lebanon and permanently stops all attacks in any form, per Tasnim.

Iran’s FM Araghchi and Parliament Speaker Ghalibaf have stated that the first clause requires Israel’s full withdrawal from Lebanese territory, with Iran emphasizing that opening Hormuz in exchange for merely lifting the naval blockade would be a “strategic mistake.”

This comes as Netanyahu has said Israel will remain in the Lebanese security zone “for as long as necessary,” and won’t withdraw, with Iran warning any further negligence will have “severe damaging consequences.”

[Prof. Steve Keen @ProfSteveKeen]

The Quiet Wealth Transfer. From Wages to Debt.
For decades, the story you were sold was simple: "Work hard, get educated, and you’ll be fine."

But behind the scenes, the engine of the economy was swapped out. We stopped powering growth with wages and started powering it with private debt.

The real macro bomb was never public debt - it was private debt. Before the 2008 crisis, U.S. government debt was about 60% of GDP. But private debt had surged up to 170% of GDP.

And that trend didn't stop.

Today, private debt remains elevated at around 145% of GDP. Higher than any pre-2000 level.

Every major modern crisis - the Great Depression, 2008 - was preceded not by government deficits, but by a collapse in private credit. When that credit engine stalls, the economy crashes. Mainstream economists ignored this. They told you banks were just "intermediaries." They lied. Banks create money, and they pumped that money into existing assets - houses - rather than factories or innovation.

[Nadira Ali🇵🇸 @Nadira_ali12]

“I am personally proud of the holocaust of Gaza, and that 80 years from now, they will tell their grandchildren what the Jews did,”

—The Israeli Minister of Social Equality.

[Jeffrey P. Snider @JeffSnider_EDU]

The Fed's dots are ridiculous.

A majority of the FOMC now thinks it might have to raise rates to fight oil inflation. They just met, and a lot of them concluded they need to be like Trichet.

The projected fed funds range moved up about half a point from March. A serious hawkish shift, and an absurd one given where oil and TIPS break-evens are.

That is why the Treasury curve flattened. The front end is pricing a growing chance they actually hike. The flat curve is saying it will not last.

Here is the core mistake. The Fed's models see inflation because oil prices went up. But oil is not inflation.

Oil can lift the CPI for a few months, and it has. But a relative price shock is not sustained inflation.

For oil to become real inflation, the shock has to spread. You need wages chasing prices. Businesses gaining pricing power. Expectations moving. Demand strong enough to absorb higher costs.

None of that is happening. Not in the markets, and not in the CPI details.

So look at the board. TIPS are falling. The Treasury curve is flattening. Oil spreads are flattening. The IEA is cutting demand.

And the Fed's response is to print more hawkish dots, because some officials still think the main risk is inflation.

That is the misdiagnosis. The market can see it. The public cannot, because the financial media only reports what the Fed says and does.

[djrichard @drjichard]

@FortuneMagazine Well velocity of money should be increasing that's for sure.

[djrichard @drjichard]

@kajakallas You go girl

[djrichard @drjichard]

@Frances_Coppola @kolasi78083 @ProfSteveKeen @CreativeDeduct @brew56200 @grok Just ask these guys how they think the monetary base increases.

[djrichard @drjichard]

@MMTLabour The queens of our colonies have bigger issues to deal with. Such as defeating the other colonies. And they have a backup plan. When the hive dies start a new colony on another planet.

[Jawad @levantupdates]

A dangerous rhetoric is unfolding and is not only going unnoticed but is being accepted even though it’s through engagement.

When the Israelis are saying Hezbollah is violating the ceasefire by firing rockets and drones on Israel, they are already implying the soldiers that are occupying areas have annexed southern Lebanon, and they are defending what they are now calling their territory.

Normalization of this rhetoric is what has lead to theft of land from this enemy across the previous decades, and cannot be allowed to be materialized.

[djrichard @drjichard]

@WSJ The queen of our colony is gracious to grant you 24 hours of leave to make it feel like her yoke is easy and her burden light.

[djrichard @drjichard]

@FT Fortunately Trump wasn't serious. The war is back on

[djrichard @drjichard]

@axios If we're all on UBI, do we have a dog in this fight?

[djrichard @drjichard]

@elonmusk The queen of our hive speaks: "Won't somebody rid us of these meddlesome criminals?"