Fed says, 'Quantitative Tightening does Nothing (QE too)' [Ep. 288, Eurodollar University]
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- Опубликовано: 18 окт 2024
- A study by the Federal Reserve finds that quantitative tightening has a statistically significant effect on rates and yields. Too bad the effect is IMMATERIAL in the EXTREME! Also, same study notes that quantitative easing is similarly a big, 'nothing burger' (their words; ok, ok - my words).
***EP. 288 REFERENCES***
How Many Rate Hikes Does Quantitative Tightening Equal?: bit.ly/3BwhD3y
The Infatuation With Fanciful Stories of Fascinating Bank Reserves: bit.ly/3xcXyMT
Supplying Treasury Nonsense: www.marketsinsi...
RealClear Markets Essays: bit.ly/38tL5a7
Epoch Times Columns: bit.ly/39ESkRf
***THE EPISODES***
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***THE TEAM***
Jeff Snider, Emperor Eurodollar. Emil Kalinowski, Ceremony Master. David Parkins, Illustrator Deus. Audio and video editor, Terence. Episode intro/outro music is "Technostalgia" by Lazer Boomerang.
***FIND THE TEAM***
Jeff: / jeffsnider_aip
Jeff: www.eurodollar...
Emil: / emilkalinowski
Emil: www.EuroDollar...
David: DavidParkins.com/
Terence: www.VisualFocu...
Lazer Boomerang: / @lazerboomerang
"Technostalgia": • Lazer Boomerang - Tech...
***DISCLOSURES***
Jeffrey Snider (The Promoter) is acting as a promoter for an investment advisory firm, Atlas Financial Advisors, Inc. (AFA). Jeffrey Snider is affiliated with AFA as a promoter only and is not in any way giving investment advice or recommendations on behalf of AFA. The Promoter is being compensated by a fee arrangement: The Promoter will receive compensation on a quarterly basis, based on the increase in account openings that can be reasonably attributed to the Promoter's activity. The Promoter will not be receiving a portion of any advisory fees. The Promoter has an incentive to recommend the Adviser because the Promoter is being compensated. The opinions expressed on this site and in these videos are those solely of Jeffrey Snider and Eurodollar University and do not represent those of AFA.
Emil Kalinowski is acting as three-ring circus ring master; he can neither confirm nor deny the presence of nuclear weapons on this show. Mister Kalinowski is neither employed by AFA nor does he receive any compensation from AFA -- not even the expensive gift basket that comes with those fancy nuts. El señor Kalinowski does not offer investment advice. Nevertheless should you torture a statement by him into taking on the form of advice, or perhaps the shape of a suggestion -- let's even say a contortion resembling a hint -- AND then act on le monsieur Kalinowski's 'recommendations'? Well, YOU WILL LOSE MONEY! Even if you do the opposite of o senhor Kalinowski's 'advice' you will ALSO lose money -- it is some kind of a paradox (both the National Aeronautics and Space Administration and Securities and Exchange Commission are investigating). The Kalinowski's only guidance is that you do not listen to him for any purpose other than deep, rapid eye movement sleep.
***TAGS***
#JeffSnider #FederalReserveBankofAtlanta #QuantitativeTightening #QuantitativeEasing #FederalReserve #CentralBanks #MonetaryPolicy
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![The Worst of the Eurodollar Downturn is Still Ahead [Ep. 286, Eurodollar University]](/img/tr.png)
![Treasury Bills Trading Below Fed's RRP 'Floor' [Eurodollar University, Ep. 207]](/img/1.gif)
'The biggest liquidatory event since Noah' 😂🤣😂🤣
lol
Emil thinks he's being funny but Noah was real.
"I can't believe they published it." 😂 Great finish!
Watching Jeff trying to keep a straight face during Emil's prelude is entertaining in of itself
"Greatest liquidity event since Noah" 😂😂Emil been practicing his comedic muscle
Brilliant as always lads.
2.2 Trillion for 0.25%. What a steal.
The King is naked!
QE, The biggest Liquidity event since Noah…💀😂💀
Thanks guys! Show more graphs and visuals
11:10
14:20 So why did they publish this? they know the only effect is from public misunderstanding , and this clarity goes against that so seems bizarre they would act to diminish the only actual psychological effect they have?
The job you two awesome guys do is top notch. Thank you.
Finally subscribed.. You guys are the best
I want Emil's magic yellow/blue/pink/orange bracelet!
Whoever is running the university could get a clue and offer some of Emil's styling accoutrements to the public.
Love the music at the end!
Gentlemen!! I bow to you and I am not worthy. Question: If QE generates less collateral would one expect QT then to generate more collateral? And there by help prevent a collateral crisis?
If so, one could think we should now have a "liquidity un-squeze" generating more loans to us moms and paps? Housing market saved by the Bell? Until we generate the next inflation spike due to the new liquidity in broad spending hands where we do evething all over again (like in the seventies).
Thank you so much for your infinite valuable informations and good laughs 😃
I love the way you ended the episode.
You guys are aces. Absolute aces. Thank you.
Love love love these videos
Statistics is a game. I run regression analysis and other statistical modeling for my work. Many assumptions have to be made and these assumptions could be incorrect. It's always important not to miss the big picture. I think the big picture is that Powell et al. screwed up big time. I think there will be massive pain ahead.
“people sneeze” hahaha I love it
Nothing from nothing is nothing, isn’t that something?
Thank you Emil. Thanks for providing
QT is a myth. QE has never ended.
Well it's a fact that Fed balance sheet has shrunk since around April. Though why does it even matter anyway if even Neel Kashkari says that the effect of QE is miniscule in the first place?
someone with drawing skills should make you into a superhero. "you shouldn't have put in the numbers" is pretty much a cliche when the hero slays the villain right after being pushed into a corner
I see Emil I drop watching other videos ;)!
Emil/Jeff, thank you.
Shouldn’t we be happy/ok that QT will NOT move 10 year rate ( or others in middle of curve ) much because the Fed can then unload its balance sheet and, especially in stressed rates environment today, there will be LOTS OF PRISTINE COLLATERAL freed up to address collateral shortage. Has Powell/Fed ever suggested that QT is really a tightening mechanism ( as opposed to just a name)? So why should we be upset that selling back 2-3 trillion of bonds will have little effect?
Emil...the CPI out this morning was NORMAL, 0.1% for August, why is the financial world still panicking? They take the January through July average to show the CPI is still high at 8.3%, but take the annualized number from August alone, 1.2%. It's normal for God's sake.
Major financial press headline: "C.P.I. Report Live Updates: U.S. Inflation Rose 8.3 Percent in August"
Because it's not dropping even though the economy is in a vice and profits are crashing in real terms.
@@philfortner1805 its 0.1, any number below this one is contraction!
I think it was cause core cpi was up alot. Also, lots of people have been equating inflation to energy prices & energy prices have been down alot for us in the US, so i think most people were thinking it would be alot lower than the 8.1% prediction. Another thing is that people still aren't really taking the fed seriously & think they are going to pivot sooner than they will. This one was a wake up call to them
Let's see a study on QE & QT effects on market psychology. Metadata analysis of news headlines alongside how many bank reserves the Fed is adding/removing from the system.
I heard there was a govt. experiment once to provide employment by having one team dig ditches, and another team came later to fill them in. It raised the employment rate, but was not very fulfilling.
Will Jeff ever change his video background? He could just shuffle the pictures to mimic the effects of the Fed doing QT or QE. Everything changes but nothing changes 😉
Changing the background will upset the autists among us.
A 25 bps hike seems inconsequential until you apply it across the curve (which investors rarely do). Particularly with high levels of public / private debt
Could we please have a episode together with Michael Howell from Crossborder Capital?
I first put this comment in a thread below, but I thought I'd ask everyone: It would be great to see a conversation between Jeff & Emil and Richard Werner or the people at Positive Money. What I don't understand is why should QT raise interest rates? If QT puts more Treasuries into the hands of commercial banks, shouldn't those Treasuries be more liquid than bank reserves? Shouldn't those Treasuries function as collateral for money markets? In other words, shouldn't QT result in less need for repo transactions?
Incredibly good point
@pnyc i think this goes hand in hand with milton friedmans interest rate fallacy
@@darksteelwolf1173 How so? I don't know it.
@@peternyc basically when rates are higher it isn’t tight credit conditions like we like to think considering banks want to lend more than if there were low rates if that makes sense
The same way as you said fed selling treasuries to commercial banks would result in increases liquidity conditions due to better collateral
Interesting video Emil. What about governments borrowing huge sums funded by central banks printing money? ie The government issue bonds and the central purchase those bonds with printed money? Does that still not cause inflation? They seem to be doing it alot lately. The UK government could have to borrow £150 billion to help people pay their heating bills, that's on top of the furlough scheme during covid 🙈
That's only $783b or so a year.
Relative pocket change. They must be hoping their laughter will be contagious and the NPCs will forget like goldfish.
Thanks gents
Why does Emil´s hair band thingy keep changing color ?
To count 1 Trillion seconds, it takes over 30,000 years.
Emil - question for Jeff (or yourself), in respect of QE only increasing bank reserves and therefore not money, have you considered the "Money creation in the modern
economy" bulletin from the BoE, which describes the transfer mechanism of how broad money enters the real economy (as a consequence of QE). My sticking point on Jeff's many interviews is that QE does not result in broad money creation, but this is in contrast to what the BoE say.... in the end, the commercial banks are buying the bonds from pension funds etc, selling these to the central bank for reserves and creating new deposits in the relevant accounts. Look forward to hearing from you.
@Down- Watch a vid by Richard Werner (who coined the term QE) on Japan's efforts in this direction. BoE is wrong or lying.
@@PinballBob1 Hi thanks for your reply, I'm familiar with Richard Werner's work and how QE can be used to essentially recapitalise the banking sector during emergencies and how instead Japan have used it endlessly since in order to try generate growth / inflation, but I don't see how Richards work contradicts the Bank of England's point. Could you elaborate?
@@downshift4503 It's a bit too complicated for a comments section, but the short answer, & one that Jeff says constantly, is that CBs do not print money to buy bonds, they just create reserves which do not get into the money system & cannot.
Since most people do not understand economics at this level, the BoE, BoJ, et al, can say whatever they like to the public. It's only necessary to fool most of the people, most of the time.
@@PinballBob1 I agree on that point.... but if the bonds to be purchased by the central bank lie outside of the commercial bank itself. (lets say in a pension fund which obviously does not have a central bank account), the commercial bank obtains them by creating a liability in the pension funds account and taking on the bond asset as an asset. This commercial banks liability (ie asset of the pension fund) is in fact broad money, same mechanism as the commercial banks uses when creating loans. When the commercial bank sells this bond to the central bank, of course it is receiving a bank reserve asset and the central bank gets the bond. The central bank didn't create money. The commercial bank did in order to obtain the bond in the first place.
Now it could be, that the answer is sometimes broad money is in fact created just as I outlined, but that as this resides within the lets say 'investment world," it doesn't really enter the real economy but instead pumps up assets. That would still validate why QE isn't really effective at producing GDP, but does in fact, as a side effect of the transfer mechanism through to the pension fund, product broad money.
@@downshift4503 Your point is a very good one, & I think beyond my understanding. Since pension funds do not have a CB acct, they must go through an intermediary which does, or buy in the marketplace.
My guess is that, if through a bank with an acct with the CB, only reserves are credited to the bank by the BoE, BoJ, Fed, etc. No money creation. In the marketplace, I don't know. Maybe it's just 1 more step in the process. I would like to know the truth of the point you brought up.
I do enjoy these videos but I am not sure what to think of kasual Kalinowski. It's like we interrupted your holiday.
Truly stunning 😳😱😱
"Statistics are just a means to an end"
Let's try to reverse the situation. How much QE is needed for BOJ to keep interest rates artificially low at 0.25bps? According to this study - a lot!
Can you guys actually bring up the balance sheet for September 08/2022 because they actually have the numbers there and that doesn't look like they even started QT
The balance sheet is dropping. Sometimes it goes up a little but next week when they update their numbers it'll drop.
The system is collapsing, and there is no way to stop it . Simple
Is the Great Reset a 'normal period'? or a 'crisis period"?
“…thousand million…” lol
What’s going on with all the Mortgages that were fixed to 2.5% interest, who’s losing money on holding those loans?
QT or not, US government is still pumping money into market, one way or another. Without this the market would have crushed months ago.
Quantative Anemia....
Quantitative tightening/easing are just relative degrees of Fed "accomodation" of Treasury borrowing. More accommodative. Whoopee. Less accommodative. Uh oh. But do you want to use this quirky "preferred habitat" to question the efficacy of the transmission mechanism of all old fashioned open market operations? I.e., when Fed "tightening" meant selling T obligations to reduce liquidity rather than greater/lesser accommodation of the Treasury's appetite for borrowed funds. Real OMO can move financial markets in minutes. You also have to wonder how much the Fed's "forward guidance" is worth.
QE and QT primarily impacts asset prices. Neither has very little direct short term impact in the real economy.
QT and QE are reserves created through asset swaps. They never enter the real economy, so they can not impact asset prices. Asset prices move inversely to the interest rates, with a lag of many months. Interest rates, of which, the levels control the amount of new money (Credit) the banks create out of thin air when making loans. As rates are lowered, it enables the banks create more money out of thin air for loans. Increasing the supply of money without increasing the supply of goods and services leads to inflation. Inflating of asset prices as well. The central banks are creating the World Economic Forums WEF goal for the younger generations..... "You will own nothing and you will be happy"
@@accountfake1070 Assets prices aren't part of the real economy - they're part of the financial economy - and quantitative easing does increase asset prices. Maybe I'm wrong, but here is my understanding of the monetary/financial system and quantitative easing.
There are 2 economies - real and financial. The real economy is generally what people actually care about. It includes all of the goods and services we produce and the things that provide them. The financial economy includes financial assets (stocks and bonds), insurance and real estate. There is some interplay between the two, but they can also operate independently of each other.
We use a debt-based monetary system where all money comes about through the simultaneous creation of a debt instrument. In a debt-based monetary system, everything nets to zero - one person can only be net positive if someone else is net negative. In such a system, there are 2 groups, the monetary sovereign (for the US dollar, it is the US government) and everyone else. Because people have a desire to be net positive, the monetary sovereign has to be net negative - the monetary sovereign's debt is not debt in the traditional sense in that it is never paid back, it is always rolled over (and if the monetary sovereign is in surplus, that is a warning sign that either everyone else thinks your economy will be permanently smaller and they want less of your money, or that everyone else is behaving irrationally and your economy is well into the speculative/Ponzi finance stage of the financial cycle). Everyone else has to either pay off their debts or have their debts erased in bankruptcy. The sum of all of the debts in the system is equal to the total money supply.
If everyone else pays down their debts and the monetary sovereign does not increase its debts, then the total amount of money in the system declines. If the monetary sovereign increases its debts in the same amount as everyone else reduces their debts, then the total amount of money in the system stays the same. If either group increases its debts more than the other group lowers its debts, then the total amount of money in the system increases. When debts are issued with a positive interest rate, there is necessarily a shortage of money for people to service their debts. This fact when combined with the fact that a growing real economy will need more money generally means that the total amount of money/debt will have to grow over time.
I'm not going to talk about the difference between an actual investment vs. speculation/Ponzi schemes/rent-seeking, but it is important to know the difference and most people seem not to.
The best easy measure of how productively a system is creating money/debt is by looking at how the total debt-to-GDP ratio changes over time. Note that the following numbers were done from memory. From 1913 (the start of the modern monetary system in the US) to 1929, the total debt-to-GDP ratio increased from
@@cn768623 TLDR it all. A house is an asset. Collectables, Art are assets. All those prices went up as a direct result of lowering interest rates. The additional money printing by the local banks for housing, cars, etc feeds into the rest of the economy creating prices of everything to rise. Rate moves and the response by the economy takes time. About 18 months. Inflation was spiking more than a year ago. Maverick and many others were calling for rate increases more than 18 months ago. The mess the central planners, Central banks, have created is either stupidity or intentional. The Central banks are fuil of PHD economists. They are not stupid. sooooooooooo !
@@accountfake1070 but it did affect asset prices. It put a value on assets that could not be valued which was the whole point of the collapse of bear et al and prevented markets valuing them as peanuts. I'm sure it was Jeff that has pointed this out in the past.
@@crimmeyd00d47 Credit creation determines whether assets rise or fall. That said, there is a limit to what people can borrow at an interest rate level due to their income. Once that level is reached, the economy will stagnate. Which is what was happening in the third quarter of 2019. The FED lowered rates 3 times to increase credit creation.
Jeff is not always right. He has said there is a shortage of US dollars, then says the entire Euro Dollar system is loans made out in US dollars by institutions who don't have any US dollars at all. They create dollars out of thin air, yet there is a dollar shortage ? He does contradict himself. I listen to alternative views, ot only the ones I agree with, because sometimes they have additional information I was not aware of.
'stopping money fraud does nothing;
I want intro music the outro is so cool
YOu don't need studies, you have actual cases, in 1793, in 1821 in the UK, in 1873, and 1878 in the US. So bad in the US in1878 that it was misery in agriculture when Silver was demonetized.
Country synth wave?
The education on QE and QT out there is so misleading!!! Its annoying.
0:39 :).
DO AN EPISODE ON EMIL'S BOOK COLLECTION
Jeff still wrong after all these years
I m a dummy, but interested to know how is he wrong?