A Repeat of 2010 in the Works?

Bailouts, Banking, Consumer Finance, Interest Rates, , , , ,

Andy’s Notes: During 2010, the US Consumer paid down a significant amount of debt. It scared the moneychangers quite magnificently. In an fractional reserve, fiat monetary system, ‘growth’ comes at least in part by inflation of the money supply and the subsequent effect on prices. One of the biggest ways monetary inflation occurs is when money is placed on deposit at a bank and nearly all of that money is then lent out by the bank – at interest. Every loan increases the money supply. When loans stop?

The summer data will be very interesting to say the least. Keep in mind that this paydown happened with the federal government handing out cash – again. It could very well be that in 2020, much like 2007, the ‘stimulus’ money went to help repair balance sheets rather than to accumulate more stuff.

Sutton


source: tradingeconomics.com

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US Treasury Rates – 3/27/2020

Economics, Interest Rates, Monetary Policy, RIsk Management, , ,

The following chart shows the yields on USTreasury securities during month of March. These are end-of-day figures. Intraday, the 1-3 month were negative during the middle portion of the week.

As of Friday, 3/27/2020, the 30-year bond is paying 1.29%. This is slightly off the bottom of less than 1% on 3/9, but is still very negative in real terms (when using the CPI to discount for price inflation). You may click the thumbnail below to enlarge. We are also posting the link to the Treasury’s site as well for your convenience.

https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

Sutton/Mehl

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Andy Appears on ‘Liberty Talk Radio’

Economics, Geoeconomics, Modern Monetary Theory, Monetary Policy, , , , , ,

If you’ll please forgive the glitch at the end – the line dropped suddenly and we couldn’t get it back – there is a good discussion of how MMT is going to be rolled out. We are currently working on a paper about this timely topic and hope to have it posted here soon. It’s a research piece so it is taking quite a bit longer to put together.

Sutton/Mehl

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