The reality of the Fed's ideal of 2% annual consumer price inflation is that it steadily degrades purchasing power--and it is only when the imbalance reaches a criticality threshold such as we are seeing now that any meaningful effort is made to restore said purchasing power.
And economists are quick to blame those efforts to restore purchasing power for continued inflation above 2%--when there is ZERO data to support this. The dynamic is that continued inflation above 0% drives wage inflation, not the other way around.
Is it true there was a 29 Trillion dollar bailout to overseas banks?
The recent report.
"Dollar debt in FX swaps and forwards: huge, missing and growing"
FX swaps, forwards and currency swaps create forward dollar payment obligations that do not appear on balance sheets and are missing in standard debt statistics. Non-banks outside the United States owe as much as $25 trillion in such missing debt, up from $17 trillion in 2016. Non- US banks owe upwards of $35 trillion. Much of this debt is very short-term and the resulting rollover needs make for dollar funding squeezes. Policy responses to such squeezes include central bank swap lines that are set in a fog, with little information about the geographic distribution of the missing debt.
It is true that the Fed has arranged various swap lines to other central banks to ensure adequate liquidity in various markets.
Is the magnitude of the swaps truly $29 Trillion? That's impossible to say with certainty, because of the lack of transparency involving such transactions.
Potentially, these off-the-books swaps mean that the Fed's money supply metrics understate the actual size of the total supply of dollars potentially circulating through the world's financial markets by those several trillions of swaps. I'm not sure what the impact would be to the money supply metrics of the world's other fiat currencies.
This is one reason why I tend to discount the hypotheses that circulate through many alt-media economic discussions that the dollar is on the cusp of being functionally discarded as the world's "global reserve currency." None of the fiat currencies exist in a vacuum, and if hyperinflation reduces the value of the dollar to zero, the linkages and swap lines between the world's central banks alone would drag every other fiat currency along for the ride.
The US is not in immediate danger of the dollar collapsing, but the world may be a lot closer to the entire edifice of fiat money collapsing than anyone realizes--and there are no historical parallels which allow us to project what would happen after such an event. A fiat currency collapse would be a global economic singularity that no economic model can see past.
Well, I remember when a new Corvette, 1971 I believe, was $5495.00 sitting in the showroom.
I also remember, as a little tyke in the back of my moms Falcon, early 60's (??) and the pump said GAS WAR and it was 19.9 cents a gallon.
Wages haven't gone up that much!
The reality of the Fed's ideal of 2% annual consumer price inflation is that it steadily degrades purchasing power--and it is only when the imbalance reaches a criticality threshold such as we are seeing now that any meaningful effort is made to restore said purchasing power.
And economists are quick to blame those efforts to restore purchasing power for continued inflation above 2%--when there is ZERO data to support this. The dynamic is that continued inflation above 0% drives wage inflation, not the other way around.
Is it true there was a 29 Trillion dollar bailout to overseas banks?
The recent report.
"Dollar debt in FX swaps and forwards: huge, missing and growing"
FX swaps, forwards and currency swaps create forward dollar payment obligations that do not appear on balance sheets and are missing in standard debt statistics. Non-banks outside the United States owe as much as $25 trillion in such missing debt, up from $17 trillion in 2016. Non- US banks owe upwards of $35 trillion. Much of this debt is very short-term and the resulting rollover needs make for dollar funding squeezes. Policy responses to such squeezes include central bank swap lines that are set in a fog, with little information about the geographic distribution of the missing debt.
Claudio Borio Robert McCauley Patrick McGuire
claudio.borio@bis.org robertneilmccauley@gmail.com patrick.mcguire@bis.org
It is true that the Fed has arranged various swap lines to other central banks to ensure adequate liquidity in various markets.
Is the magnitude of the swaps truly $29 Trillion? That's impossible to say with certainty, because of the lack of transparency involving such transactions.
Potentially, these off-the-books swaps mean that the Fed's money supply metrics understate the actual size of the total supply of dollars potentially circulating through the world's financial markets by those several trillions of swaps. I'm not sure what the impact would be to the money supply metrics of the world's other fiat currencies.
This is one reason why I tend to discount the hypotheses that circulate through many alt-media economic discussions that the dollar is on the cusp of being functionally discarded as the world's "global reserve currency." None of the fiat currencies exist in a vacuum, and if hyperinflation reduces the value of the dollar to zero, the linkages and swap lines between the world's central banks alone would drag every other fiat currency along for the ride.
The US is not in immediate danger of the dollar collapsing, but the world may be a lot closer to the entire edifice of fiat money collapsing than anyone realizes--and there are no historical parallels which allow us to project what would happen after such an event. A fiat currency collapse would be a global economic singularity that no economic model can see past.