Balance Sheet News
Stephen Williamson covers the issue for the Fed and finds a lot of foreign deposits at the Fed. What happens to the balance sheet of a global currency? The balance sheet expands, relative to a domestic currency.
Currency banker balance sheet covers price variation, innovative mis-pricings that yield sudden loans or deposits. That numbers 3%, or about 650 billion for our domestic economy. It will be much higher if the Fed is managing a global currency.
Reserve currency status is keeping the ten year yield suppressed as the global economy nears recession levels, Treasury becomes safe haven. If global conditions change a reserve currency means the ten year is subject to sudden change, beware the housing market.
What could change?
Islamonuts got whalloped in the middle east; Iran, Stria and Lebanon engage in a period of peaceful consolidation, staying away from Israel. China bites the bullet on a number of important reforms. Something good happens in Italy, France, or North Africa.
What is new here?
Relative to last cycle, this is a watched pot economy, the sandbox is partially active and the trades watched much more closely by automated processes everywhere. All the possible sudden stops get hedged, and we get sudden slows instead, we tend to be Euler. Global trade information is virtually cost free and instant and quite a bit more accurate. I am betting on another 60% efficiency in adjusting than the Nixon Shock, the impulse response mild.
This post says:
The Nixon Shock was not the end of the world, was not a major depression. So, the bots tell us, just take a little longer, do it a little less, and adjust your government agencies to cash flow accounting. Letting major government agencies, at all levels, keep Fed accounts is a great idea here. Tell the millennials to keep as much ice frozen as possible and watch for volcanoes.
Reserve currency status is keeping the ten year yield suppressed as the global economy nears recession levels, Treasury becomes safe haven. If global conditions change a reserve currency means the ten year is subject to sudden change, beware the housing market.
What could change?
Islamonuts got whalloped in the middle east; Iran, Stria and Lebanon engage in a period of peaceful consolidation, staying away from Israel. China bites the bullet on a number of important reforms. Something good happens in Italy, France, or North Africa.
What is new here?
Relative to last cycle, this is a watched pot economy, the sandbox is partially active and the trades watched much more closely by automated processes everywhere. All the possible sudden stops get hedged, and we get sudden slows instead, we tend to be Euler. Global trade information is virtually cost free and instant and quite a bit more accurate. I am betting on another 60% efficiency in adjusting than the Nixon Shock, the impulse response mild.
This post says:
"...we have a whole bunch of major cycles all at key inflection points simultaneously colliding with each other, yet the consensus view seems to be that the status quo’s just gonna continue along as it has in the past. It won’t..."Yes, but we can still keep the tree trunk round, we been here, done this.
The Nixon Shock was not the end of the world, was not a major depression. So, the bots tell us, just take a little longer, do it a little less, and adjust your government agencies to cash flow accounting. Letting major government agencies, at all levels, keep Fed accounts is a great idea here. Tell the millennials to keep as much ice frozen as possible and watch for volcanoes.
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