Making Sense

How many swings does the Federal Reserve get?

Hark! Inflation's war cry... At least that is what you'll read in the pages of the financial media. And that is EXACTLY what your central bankers need you to believe.

Both the US Treasury General Account and Federal Reserve balance sheet are exploding in size. If either was central to money supply the US dollar would fall in value. But they aren't and it isn't.

Is the post-2008 economic 'boom' proving Marxism? Would communism's big three look at 2020 approvingly? Is communist utopia counter to human nature? Also, yield curve control and more.

Jeff Snider answers your questions about central banks, inflation, measuring money, private banks... and potpourri? A Jeopardy!-style mailbag show with the 'Cliff Clavin of the Eurodollar'.

The Communist Manifesto was in response to the 1820-30s. Marxism's worldwide appeal in the 1930s was a consequence of the 1920s. And now, in response to the 2010s, it's ascendant again.

Econometrics? Sure. But are you familiar with the study of tasseomancy? Never given it any serious thought? Then how can you possibly understand the Chinese economy?

American books and films published in 1925 will be entering the public domain next year. Included among them will be The Great Gatsby by F. Scott Fitzgerald.

Millennials may not know this, but many centuries ago mail came by bag not by vibration nor beep.

The 2020 economic recovery is shaping up to be the worse V since "V", the 1980s American mini-series.

Then: a man or a woman who is a medium or a wizard was ascribed powers of enchantment and the supernatural. Now: a monetary technocrat is imbued with necromancy, conjuring money out of thin air and levitating stock markets.

Dr. Milton Friedman, in a December 1997 article, correctly diagnosed what was wrong with the Japanese economy: not enough money. His prescription? Quantitative easing. It was, unfortunately, malpractice. In late April 2020, the Bank of Japan announced its 24th iteration of it. Maaaaaaaaaaaaaaaaaaaaaaaalpractice.

On September 21, 1897 the The Sun, a newspaper out of New York, printed an editorial in response to a letter from eight-year old Virginia O'Hanlon. "Yes, Virginia, there is a Santa Claus," came the reply. In that tradition, Making Sense presents episode eight, in which we answer your questions.

The monetary system is missing of money. Expectation of its return is no longer enough; actual recreation of modern money is needed. That job belongs to the private sector, the banks. It was true of the 1930s, and true of present day.

Hubris. It will get us to the stars but seduce us into believing we belong there. Today, monetary authorities suffer it, believing they can manage the nonlinearity, emergence, spontaneous order, adaptation, and feedback loops of the unravelling.

Ancient myths, like Crete's Minotaur or the Monkey King, are not taken seriously. But what of modern ones like the Greenspan Put, stock buying Bank of Japan or Treasury selling bond kings? They are, with a Pavlovian-like response by the financial press, celebrated.

The World Trade Organization's projections, America's labor force participation and the oil futures market are each suggesting that long-term economic damage has already been absorbed. A sharp, smart global recovery looks improbable.

Jeff Snider (@JeffSnider_AIP), Chief Investment Officer at Alhambra Investments and Prince of Shadows (banking), as well as Emil Kalinowski (@EmilKalinowski) discuss the Federal Reserve latest emergency liquidity programs as well as the International Monetary Fund's 'conservative' estimate of needing $2.5 trillion to cover the 80 requests it has received for emergency funding.

Jeff Snider (@JeffSnider_AIP) and Emil Kalinowski (@EmilKalinowski) review three topics: repurchase agreement stresses, low interest rates signalling disorder and why LIBOR doesn't think the Fed's new program is the greatest liquidity event since Noah.