I have had two suppliers in the last month notify us that they will be raising prices 10% due to the U.S. issuing more currency. Has anybody else had this experience? Looks like inflation is coming and we're are experiencing the first hand effects of it.
The current US federal policy of zero interest rates coupled with significant asset purchases (1 trillion USD per year right now) in the bond market may be driving significant capital into cryptocurrency. I'm going to focus on US since thats what I'm most familiar with but my understanding is that a lot of central banks are taking a similar stance.
I'll start with interest rates. When interest rates are low, asset pricing models deeply discount future earnings, which makes so-called "growth assets" like tech stocks look much more attractive. Put another way, when interest rates are 0, it doesn't really matter if the asset is going to be valuable in 2021 or 2025, it all gets priced in. Accordingly, we have seen an absolute boom in growth and hypergrowth equities. Solar companies with < 1 billion dollars in annual revenue carry 20 billion dollar market capitalizations. If traditional investors view cryptocurrency as an asset with substantial potential for future value/ growth, they might view the current fed policy as an opportunity to get into the crypto space.
A more important consideration may be inflation. Printing money to purchase assets to prop up the bond market is expected to lead to a substantial increase in USD inflation - which should drive investors towards inflation-resistant assets like real-estate, gold, and more recently, BTC and other cryptocurrency.
The good news is the current policy is here to stay- at least for now. It seems like every week the fed is promising to keep juicing the economy with every tool in its arsenal - which should keep this crypto-friendly environment in place for a while yet. The music has to stop eventually though - I'll be interested to see how the crypto markets handle rising interest rates or a decreased risk of inflation in fiat currency.
A big factor in the housing crisis here in Canada stems from monetary policy -- otherwise known as low interest rate environment.
One benefit of monetary policy to the public is to increase household spending by reducing borrowing costs. However, one important caveat to note is that this only benefits current homeowners/asset owners.
In addition, low interest rates create asset inflation which is not considered in the CPI inflation index.
Quote from BoC: "The CPI doesn’t capture every price or always reflect every Canadian’s lived experience. For example, while property taxes and homeowner’s insurance are included as part of shelter costs, house prices are not, because real estate is considered an asset, not a good or service. Depending on where you live in Canada, this can make a real difference in your cost of living. "
What this boils down to is that monetary policy as a tool to dampen a recession creates a set of winners (homeowners and asset owners) and losers (younger generations without assets).
I for one would like to see some changes to our monetary policy system. Mainly, I think that housing asset prices should be added to the bank of Canada's inflation mandate.
Also, Is it right to expect the inflation to increase just with a loose monetary policy?
The Wizard of Oz as Satire – A Closer Look
To some extent, allegory and metaphor are always in the eye of the beholder, and unless an author has explicitly explained just exactly what he or she was trying to say in a particular work – and Baum never revealed his true intentions with respect to The Wizard of Oz to anyone – there will always be room for disagreement and variations in interpretation.
With that disclaimer out of the way, what follows are a list of some of the political-historical allegories and metaphors that careful analysts have identified after looking very closely at the characters and situations in The Wizard of Oz:
- Dorothy – the all-American girl who represents virtuous, hard-working citizens who were attracted to radical politics because they realized things had gone terribly wrong and that something needed to change.
- The Cowardly Lion – this was William Jennings Bryan, the Populist and Democratic candidate for president in 1896 and 1900, who was nicknamed “The Lion” for his fiery rhetoric and called a coward by many for his refusal to support America’s decision to go to war with Spain in 1898.
- The Scarecrow – the American farmer, who was often portrayed as illiterate and brain-dead by elite policymakers who feared their radical activism and support for Populist-style reforms.
- The Tin Man – the American industrial worker, who had been exploited and treated like just another piece of machinery by rich and powerful employers.
- The Munchkins – the poor tired mass of citizens in the United States, enslaved by powerful interests and clueless about what to do to change things.
- The Yellow Brick Road – the gold standard. Monetary policy was a huge political issue at the time, with big businessmen generally supporting tight money and the gold standard while reformers favored an enlargement of the money supply through the coinage of silver or the issuance of paper money.
- Dorothy’s Silver Slippers – a representation of silver. Just as many in the book believed the silver slippers that Dorothy had acquired after accidentally killing the Wicked Witch of the East had magical powers, many farmers, laborers, and small businessmen believed that expanding the money supply by putting more silver in circulation would stop the boom-or-bust business cycles that plagued the economy during that time. More money would increase demand for goods and services, freeing up more funds for smaller inve
While the American middle and working classes are being pauperized by asset inflation and the destruction of their purchasing power, the Fed is solely focused on further enriching the already super-wealthy.
https://www.cnn.com/2021/05/10/business/jeff-bezos-yacht/index.html
**New York (CNN Business)**Today in ultra-billionaire news, Amazon founder Jeff Bezos has purchased a modest 100-foot schooner as he looks forward to a quieter life and hours of reflection on the open seas ... LOL, just kidding.
The world's richest man is reportedly buying a boat, though that word feels inappropriately sensible for the monstrosity going to Captain Bezos: a 417-foot superyacht that's so massive it has its own "support yacht" with a helipad, according to Bloomberg. The estimated cost, not including the boat's support boat, is $500 million.
The question pretty much sums it up.
I understand that the repo maket has certain advantages over doing things more directly, e,g, the dealer returns the money over the central bank has to do things directly, provide more liquidity. My question is when did that become really clear and what was the thinking behind it? Is there some model I should be aware of ?
I also know that the US repo market is more developed than the EU, though I think roughly 60% of the EU repo market is in euro (number might be too old). I also know that gensaki, repos with Japanese treasury bonds, payed an important role in the past but declined during the 1980s, due to the increased use of commercial paper and a tax ,and that the Japanese central bank wanted to revive them in the 2000s, with limited sucess. So my question here is how have different markets reacted to the change in monetary policy in the repo marktet ? And lastly why does Japan want to revive it and how sucessful has that been ?
Why does the combination of loose fiscal and monetary policies lead to high real rates? I understand how this leads to high inflation, but isn't loose monetary policy supposed to keep the rates down to stimulate the economy and spending?
Write your opinion
Yes!!!!!! Finally! TO THE MOOOOOOOON!!!!!!
The biggest question I have with haven is the way the peg is maintained. What's to prevent a speculative attack on the peg:
If I borrow a massive amount of xUSD... Sell it all into another USD stablecoin, wouldn't it be theoretically be possible to drain XHV of all value? Then I could pay back my loan in xUSD, which is now worthless.
This is at the end of the day some of the biggest risks with algo stablecoins... Some other Algos like Terra Luna have overcome this by ensuring that the arbitrage token has a cash flow to maintain a minimum price, but it looks like there's no such feature in Haven.
The IMF - "The central bank to the central banks" - warns that wealth inequality [CREATED BY CENTRAL BANKS!] is eroding trust in governments & institutions. No shit....that's because in the U.S. and virtually every other country with a central bank, the system serves ONLY the interests of a corrupt and venal .1% in the financial sector at the expense of everyone else.
The International Monetary Fund warned that inequalities which have been exacerbated by Covid-19 may lead to polarization, erosion of trust in government and social unrest.
I apologize up front as I am probably wording this in a weird way..... but something I've started thinking about recently is if crypto might actually benefit our governments, or at least benefit monetary policy in the sense that we know it.
What I mean by that is........ in the United States the Federal Reserve has basically said that they are ok letting the money printers go brrrrrr and that they will do everything in their power to keep the economy afloat which means they are going to keep introducing new dollars into the system. Obviously this is going to increase inflation. Once the average person is aware of crypto I would imagine it could be commonplace for people to throw money into crypto to keep from losing out to inflation.
With that said..... is it possible that with the introduction to crypto in the mainstream that it would give the Federal Reserve more incentive to keep printing money since they know that people have options to protect themselves from inflation? I'm curious to know everyone's thoughts on this.
You can't make this shit up. The Fed, after transforming America from a republic into an oligarchy after its 1913 establishment, then presiding over the wholesale transfer of the wealth and assets of the middle and working classes to the Fed's .1% cronies since 2008, cries crocodile tears over "inequality" in the economy.
United States Federal Reserve Chairman Jerome Powell says the economic outlook has “clearly brightened” in the United States but the recovery remains too uneven with lower income groups lagging behind.
In a speech on Monday, Powell cited a number of reasons that US growth prospects have brightened.
Hello,
Why did Polkadot choose an inflationary monetary policy? Is there a real benefit in this design? Wouldn't a deflationary monetary policy, similar to Bitcoin, be better for hodlers?
Expect the markets to be rocky this morning before and during JPOW’s testimony to Congress.
Tech is again selling off premarket, as treasury yields continue to rise.
The yield on the benchmark 10-year Treasury note advanced to 1.376% at 4 a.m. ET, while the yield on the 30-year Treasury bond climbed to 2.198%. Yields move inversely to prices.
https://www.nytimes.com/live/2021/02/23/business/stock-market-today
Listen for questions/discussion of Yield Curve Control.
Janet Yellen has been a proponent of YCC since last year and she is now in a position of influence.
What is yield curve control, and why does it matter?
In normal times, the Fed steers the economy by raising or lowering very short-term interest rates, such as the rate that banks earn on their overnight deposits. Under yield curve control (YCC), the Fed would target some longer-term rate and pledge to buy enough long-term bonds to keep the rate from rising above its target. This would be one way for the Fed to stimulate the economy if bringing short-term rates to zero isn’t enough.
Prior to the COVID-19 crisis, current Fed Governors Richard Clarida and Lael Brainard, as well as former Fed chairs Ben Bernanke and Janet Yellen, said the Fed ought to consider adopting YCC when short term rates fall to zero. New York Fed President John Williams has said that the Federal Open Market Committee (FOMC) is thinking “very hard” about whether it might use YCC this year. Other members of the FOMC have also said they think it could help strengthen the Fed’s forward guidance, which currently says that rates will remain near zero until the Committee is “confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Australia’s central bank adopted a form of YCC in March 2020, in response to the coronavirus, and is targeting a three-year government bond yield of 0.25 percent.
Yield curve control is different in one major respect from QE, the trillions of dollars in bond-buying that the Fed pursued during the Great Recession and is pursuing in 2020. QE deals in quantities of bonds; YCC focuses on prices of bonds. Under QE, a central bank might announce that it plans to purchase, for instance, $1 trillion in Treasury securities. Because bond prices are inversely related to their yields, buying bonds and pushing up their price leads to lower longer-term rates.
Under YCC, the central bank commits to buy whatever amount of bonds the ma
... keep reading on reddit ➡- One way monetary policy can support a transition towards a greener economy is through lending facilities. With these facilities, central banks supply loans to financial institutions in exchange for securities as collateral. Adding a security in the list of eligible collateral can affect its price, and in turn affect the real economy. On June 1, 2018, the People’s Bank of China (PBoC) broadened the asset classes accepted as collateral for its Medium Term Lending Facility (MLF) to include financial bonds, in particular, green bonds, bonds issued by small and micro enterprises (Xiaowei bonds) and bonds issued by agricultural corporations (Sannong bonds). The PBoC also gave green bonds priority over other financial bonds (a first-amongequals status). We study the impact of this policy on the yield differential between green and non-green bonds.
- We use a difference-in-differences approach with higher frequency data than for most other studies. We compare green financial bonds with other financial bonds issued by the same firm, hence with identical firm specifications. This means that our identification process focuses on analyzing green and non-green bonds with similar characteristics, except for their green status. We measure the spread between green and non-green bonds’ yields before and after the reform. The premium of green assets over non-green assets has been labelled “greenium” and is subject to a large literature. We show that the greenmium amounted to 32 basis points at the time 2018 reform in China. We find that the policy further increased the spread between green and non-green bonds by 46 basis points.
- During these periods, the difference between green and non-green bonds are not statistically different from what they are just before the reform**. This means that the trends in green and non-green bonds’ yields before the reform tend to be similar. This is less marked (see the very left of Figure 2 and 3) when testing earlier time periods, yet the factors tend to be lower than the value just before the reform, meaning that from the start of the timeframe up until 5 months before the reform, the spread between green and non-green bonds (the greemium) tend to decrease.**
- After the policy shock, yields of the green bonds are significantly reduced compared to nongreen bonds. **The policy reform therefore reversed a potential
Hey reddit!
There are a lot of rumors about the decision that will be made tomorrow. Are there any hints about the decision? Have banks updated their interest rates?
