Printing Money: The Absolute Privilege of U.S. Dollars(imgracehuang.medium.com)
imgracehuang.medium.com
Printing Money: The Absolute Privilege of U.S. Dollars
https://imgracehuang.medium.com/printing-money-5c4fcf9684fa
53 comments
I hope it is far in the future but you are probably correct that losing reserve currency status may occur much faster than the pundits say it will. I worry that weaponizing the dollar with excessive sanctions will hurry this process, with not much real value to US citizens.
What currency is stable enough to replace the Dollar? Very likely we repeat the Cold War - Western countries will definitely continue to use the Dollar.
I wouldn't want to use the Yuan considering the frequent government manipulation of the currency.
I wouldn't want to use the Yuan considering the frequent government manipulation of the currency.
Fair question! If I had to guess: the USA + Europe + Canada + Australia + a few other countries will form one trading block, and BRICS + about 20 other countries will form a separate trading block. The different trading blocks will use different reserve currencies. The BRICS+ trading block would use a basket of currencies and our trading block would use the US dollar, or a basket of currencies with the dollar being the largest percentage in the basket.
I love to travel and visit other countries and meet people. My hope is that a tourist will continue to be able to easily visit any country, even when the world bifurcates into two trading blocks.
I love to travel and visit other countries and meet people. My hope is that a tourist will continue to be able to easily visit any country, even when the world bifurcates into two trading blocks.
It’s not just about stability (and rmb is basically pegged to dollar anyway) - you also need to run a deficit and that’s not something China is willing or able to do for foreseeable future
> you also need to run a deficit
Why is this needed?
Why is this needed?
> > you also need to run a deficit
> Why is this needed?
At a guess...being the worlds reserve currency creates demand for your currency which drives it's price up. This is bad in general because it means your exports become more expensive. The way you deal with that is to create debt to export in the form of US treasuries, which foreigners can then buy. One way to create treasuries is to create a public deficit (not strictly necessarily, you could raise money even with a surplus and then invest it)
> Why is this needed?
At a guess...being the worlds reserve currency creates demand for your currency which drives it's price up. This is bad in general because it means your exports become more expensive. The way you deal with that is to create debt to export in the form of US treasuries, which foreigners can then buy. One way to create treasuries is to create a public deficit (not strictly necessarily, you could raise money even with a surplus and then invest it)
Probably only the euro. The yuan isn't the best option for reasons you mention, and the next largest reserve which countries hold is only the euro. Link to interesting podcast episode about exactly that: The Red Line Podcast https://open.spotify.com/episode/6DVtj0E1v6pRgAiZwytmbo
You think CCP will not try to impose its whims on you? Doesn’t matter which currency it is when your bank account is frozen
Also by the time US loses its privileged position it will already be too late to reinvest elsewhere without losses. So many funds are already moving money to China and elsewhere. Having said that China etc have their own economic and demographic problems so nowhere seems safe at the moment.
> So many funds are already moving money to China and elsewhere.
Good luck to those investors. China has no established tradition of respecting property rights. It can change the rules of the game as it sees fit politically.
The only way to make it workable is to have some critical trading relationship that makes the cost of seizing property/money unpalatable.
Good luck to those investors. China has no established tradition of respecting property rights. It can change the rules of the game as it sees fit politically.
The only way to make it workable is to have some critical trading relationship that makes the cost of seizing property/money unpalatable.
> China has no established tradition of respecting property rights.
https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
and that's against their own citizens.
https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
and that's against their own citizens.
Are we really doing this?
https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China)
Landlords — had their land confiscated and they were subjected to mass killing by the CCP and former tenants, with the estimated death toll ranging from hundreds of thousands to millions.
https://en.m.wikipedia.org/wiki/Land_Reform_Movement_(China)
Landlords — had their land confiscated and they were subjected to mass killing by the CCP and former tenants, with the estimated death toll ranging from hundreds of thousands to millions.
You can fight civil forfeiture and not risk having your family sent to a work camp in the US.
It’s also politically very unpalatable to use it on businesses. Use it on a business and good luck getting re-elected as a prosecutor / police chief etc.
Is it used to suppress poor brown people? Sure. Is that a good thing? No. But it’s not really a barrier to investment.
It’s also politically very unpalatable to use it on businesses. Use it on a business and good luck getting re-elected as a prosecutor / police chief etc.
Is it used to suppress poor brown people? Sure. Is that a good thing? No. But it’s not really a barrier to investment.
Investing in China seems terribly risky to me.
China's been telegraphing it will attack Taiwan pretty soon. When that happens, good luck not having your investments either destroyed or nationalized.
China's been telegraphing it will attack Taiwan pretty soon. When that happens, good luck not having your investments either destroyed or nationalized.
I think war or no war those possibilities are a major risk with China given their form of government.
Not to mention their rapidly aging population. People forget: growth and economic power comes from demographics. China got old too fast. India and Africa are the remaining global youth, and I’m unsure there is appetite to invest in either market.
"So many funds are already moving money to China"
No they aren't.
No they aren't.
There is no real alternative to the US dollar as a reserve currency.
What is frequently lost in these discussions is what reserve currency status costs the US - namely in having an overvalued currency. This the primary reason why US labor is not cost competitive with the rest of the world except in the highest value-added industries.
Take away reserve currency status and you suddenly have one of the sharpest currency devaluations in human history without any immediate loss in productivity or value-add. Unleashing the US workforce at that price point is a good way to ensure that no country that isn't already highly-developed will become highly-developed in our lifetimes.
On the article itself, comparisons to the pound sterling are rather confusing. The UK faced financial problems not simply because of a shift in the monetary landscape but also the loss of its former empire which a significant portion of its domestic economy was tied up in.
The US, in comparison, is a resource-rich continental power which conducts most of its 'international' trade with Canada and Mexico (both of which the US is deeply interlinked with logistically).
The fact that people continue to draw comparisons between the UK and US economies is incredibly baffling. It smacks of some kind of 'great cycle' religion.
Take away reserve currency status and you suddenly have one of the sharpest currency devaluations in human history without any immediate loss in productivity or value-add. Unleashing the US workforce at that price point is a good way to ensure that no country that isn't already highly-developed will become highly-developed in our lifetimes.
On the article itself, comparisons to the pound sterling are rather confusing. The UK faced financial problems not simply because of a shift in the monetary landscape but also the loss of its former empire which a significant portion of its domestic economy was tied up in.
The US, in comparison, is a resource-rich continental power which conducts most of its 'international' trade with Canada and Mexico (both of which the US is deeply interlinked with logistically).
The fact that people continue to draw comparisons between the UK and US economies is incredibly baffling. It smacks of some kind of 'great cycle' religion.
> Unleashing the US workforce at that price point is a good way to ensure that no country that isn't already highly-developed will become highly-developed in our lifetimes.
I find it hard to believe that I’m reading this sentence correctly. Are you suggesting that hurting the US working class while moving an increasingly greater percentage of profits into the hands of the globalist class is actually a good and virtuous thing?
I find it hard to believe that I’m reading this sentence correctly. Are you suggesting that hurting the US working class while moving an increasingly greater percentage of profits into the hands of the globalist class is actually a good and virtuous thing?
How did you read that from what I said? The people who would benefit most from de-dollarization would be the US working class working in manufacturing, agriculture, and primary product exports because suddenly their labor would be cost-competitive with other export-oriented economies.
De-dollarization would really be a massive blow to the finance and services class because the US would suddenly be a far less attractive place to park your money whereas it would be good for the class which produces products for export.
Michael Pettis' books have a pretty good coverage of this perspective.
De-dollarization would really be a massive blow to the finance and services class because the US would suddenly be a far less attractive place to park your money whereas it would be good for the class which produces products for export.
Michael Pettis' books have a pretty good coverage of this perspective.
I’ve been thinking about an “equity only” currency where charging interest and debt are outlawed.
If you need to raise money for a project, to buy a property, or to finance a business, you must sell a portion of your venture/asset to raise the necessary capital.
The idea is to outlaw debt and money creating more money via interest.
I don’t see why this system can’t be as efficient as a debt and interest based financial system.
It would require getting rid of agencies like the SEC and replacing these regulatory bodies with a very efficient stock system, like ICOs.
Lending money to a business is essentially the same as investing in it anyway. If the business defaults the result is the same.
This would eliminate the parasitic effect of excessive interest from the economy. It would need to be combined with a basic social safety net set low enough to encourage people to remain productive.
An interesting thought experiment, what if people ICO’d their future earnings, selling themselves into indentured servitude to repay the hard currency they borrowed?
That’s what people are doing when they borrow money today. It’s also what happens when nations go deeper into debt to central banks!
If you need to raise money for a project, to buy a property, or to finance a business, you must sell a portion of your venture/asset to raise the necessary capital.
The idea is to outlaw debt and money creating more money via interest.
I don’t see why this system can’t be as efficient as a debt and interest based financial system.
It would require getting rid of agencies like the SEC and replacing these regulatory bodies with a very efficient stock system, like ICOs.
Lending money to a business is essentially the same as investing in it anyway. If the business defaults the result is the same.
This would eliminate the parasitic effect of excessive interest from the economy. It would need to be combined with a basic social safety net set low enough to encourage people to remain productive.
An interesting thought experiment, what if people ICO’d their future earnings, selling themselves into indentured servitude to repay the hard currency they borrowed?
That’s what people are doing when they borrow money today. It’s also what happens when nations go deeper into debt to central banks!
I guess I have a few questions.
1. Why are returns on equity inherently favored versus returns on debt?
2. How is new money created as productive capacity increases?
3. How are you going to have an efficient stock system when every transaction requires immediate settlement?
4. Why do the securities regulators need to go away in a hypercharged securitized society?
5. How are people borrowing hard currency in their road to serfdom? I thought there was no debt?
6. When you say debt is the same thing as equity, are you saying that in a stylized Modigliani-Miller sense or do you literally think debt and equity get similar treatment in the capital stack?
7. Do you realize that everyone debt is someone else’s asset?
1. Why are returns on equity inherently favored versus returns on debt?
2. How is new money created as productive capacity increases?
3. How are you going to have an efficient stock system when every transaction requires immediate settlement?
4. Why do the securities regulators need to go away in a hypercharged securitized society?
5. How are people borrowing hard currency in their road to serfdom? I thought there was no debt?
6. When you say debt is the same thing as equity, are you saying that in a stylized Modigliani-Miller sense or do you literally think debt and equity get similar treatment in the capital stack?
7. Do you realize that everyone debt is someone else’s asset?
> Lending money to a business is essentially the same as investing in it anyway.
They’re very clearly not the same, debt and equity are separate things that serve different purposes. And yes, I am aware of convertible bonds and other forms of combined debt/equity instruments.
Debt is senior to equity in bankruptcy filings. A troubled company will pay its lenders and bondholders before paying dividends to its equity investors.
There has always been debt, society can’t function without it. “Lend me seeds now so that I may grow a crop and pay you back at harvest time” is a form of debt that has been around as long or nearly as long as agriculture has.
They’re very clearly not the same, debt and equity are separate things that serve different purposes. And yes, I am aware of convertible bonds and other forms of combined debt/equity instruments.
Debt is senior to equity in bankruptcy filings. A troubled company will pay its lenders and bondholders before paying dividends to its equity investors.
There has always been debt, society can’t function without it. “Lend me seeds now so that I may grow a crop and pay you back at harvest time” is a form of debt that has been around as long or nearly as long as agriculture has.
Give him a break, he’s in the middle of re-discovering Modigliani-Miller, except with a dash of crypto-optimism and pro-indentured servitude (??) thrown in.
You're arguing from today's legal framework. I'm not interested in today's legal framework. My point is debt doesn't need to exist and we could operate more efficiently using a currency with a pre-defined supply with efficient equity markets.
Please read the book ‘Debt: The First 5,000 Years’ and then re-examine your ideas about not needing debt. I think you’ll find that we do in fact need debt to function as a society.
A currency with a pre-defined supply is a non-starter, there are multiple academic papers you can find that will tell you exactly why.
A currency with a pre-defined supply is a non-starter, there are multiple academic papers you can find that will tell you exactly why.
>Lending money to a business is essentially the same as investing in it anyway. If the business defaults the result is the same.
It is far more common for a business when times are hard to stop (or never start) paying out to its equity investors (dividends) while still servicing its debt. It is not "essentially the same as investing".
It is far more common for a business when times are hard to stop (or never start) paying out to its equity investors (dividends) while still servicing its debt. It is not "essentially the same as investing".
That’s only because of the way loan agreements are structured and because law and regulation are written around a debt based system.
If businesses couldn’t take on debt there would only be one class of stakeholders, the shareholders.
It would be an interesting thing to pilot in Muslim countries where charging interest is effectively forbidden. I think it could be a more efficient, transparent, and equitable financial system.
If businesses couldn’t take on debt there would only be one class of stakeholders, the shareholders.
It would be an interesting thing to pilot in Muslim countries where charging interest is effectively forbidden. I think it could be a more efficient, transparent, and equitable financial system.
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So no credit cards for businesses or their employees ? What about unpaid invoices to other businesses , do they get converted to debt or equity ?
There is no more debt or credit. Unpaid invoices are defaults where the violating party has their shares liquidated as a margin call to cover their bill. Businesses would be much more conservative about having currency to cover their bills, which would end the boom/bust/repossess economic cycles.
Digitizing ownership solves all of the “problems” with not having “credit”. Raising capital would be a simple as selling tokens on decentralized exchanges for the hard currency unit of account. Accounts payable are smart contracts due at a specific date/time.
You would have to completely reform the SEC for this to work. They would need to get out of the way for the most part (no more red tape and accredited investor nonsense) and only handle edge cases that can’t be automated.
Central banks would no longer exist to profit from issuing credit to nations. Taxation would have to be transparent and politicians accountable, because there is no more money printer.
Digitizing ownership solves all of the “problems” with not having “credit”. Raising capital would be a simple as selling tokens on decentralized exchanges for the hard currency unit of account. Accounts payable are smart contracts due at a specific date/time.
You would have to completely reform the SEC for this to work. They would need to get out of the way for the most part (no more red tape and accredited investor nonsense) and only handle edge cases that can’t be automated.
Central banks would no longer exist to profit from issuing credit to nations. Taxation would have to be transparent and politicians accountable, because there is no more money printer.
This was done in the past. Money lending (usury) was outlawed.
For 100+ years, interest above a certain percentage was outlawed until congress created a exclusion loophole for federal financial institutions.
If you haven't already read the book "Debt, The First 5,000 yaers" by David Graeber, I think you'd get a lot out of it.
Also, Market system's aren't a silver bullet.
For 100+ years, interest above a certain percentage was outlawed until congress created a exclusion loophole for federal financial institutions.
If you haven't already read the book "Debt, The First 5,000 yaers" by David Graeber, I think you'd get a lot out of it.
Also, Market system's aren't a silver bullet.
I’m not talking about outlawing usury by fiat, more the automation and extension of equity markets into the general economy using smart contracts for ar/ap using margin calls for unpaid bills and a pre-defined money supply currency as the unit of account. Credit at interest would not be supported and would be unnecessary.
I never said fiat, I said usury (interest), and that goes on any underlying asset.
I see where this is going though. Its not a new idea, it runs very close to similar lines of thought put forth by the authoritarian socialists.
It all sounds like a magical utopia until you get into the details. Promises are put forth, but once power is ceded, abuses happen. Those in power will claim "but those only happen because there is not enough of power and we face oblivion, anyone not with us is against us, they threaten our future", and the fools that are scared will believe it, and they are the ones that allow everyone else to become slaves. Its part of a common authoritarian playbook, and has happened many times throughout history.
https://www.mit.edu/people/fuller/peace/war_goering.html
When you look at the requirements for clearing at a national scale, it requires a centralized system with coercive control, and absolute information (future sight). For the most part those systems only operate efficiently because of corruption, and there is no future sight thankfully.
It doesn't address a number of issues with any centrally planned economy and without incentives it must be centrally planned to produce goods. Having assets without being able to use them means no property rights. The borgeioux/monopolists take over and the common man only needs bare subsistence. That's fine in a pre-limits of growth world but we'll be at 9B people soon and predefined currency pool without expansion doesn't take into account population growth. So given contention, who decides who lives and has children, or dies and doesn't. In that kind of system, the people at the top.
You end up with no investment, no companies, and no future within a generation or two (20 years = 1 generation).
Inevitably shortages occur, and when they do it causes death when its a strategic good (i.e. food). That death also won't be coming to those at the top while there's such a larger pool below. The people at the top need the good more since they are responsible for decisions that impact the whole. Sometimes its necessary to cut off a leg so the body can survive. Its important that the designated people can continue to make these important decisions in times of crisis... so they would say.
You can tweak those systems any number of ways and end up with the exact same outcome when you don't address the core problem of economic calculation which doesn't have a solution in centrally planned economies. Its not new, its old, there's quite a large body of material from the 1920s-1940s on it.
I see where this is going though. Its not a new idea, it runs very close to similar lines of thought put forth by the authoritarian socialists.
It all sounds like a magical utopia until you get into the details. Promises are put forth, but once power is ceded, abuses happen. Those in power will claim "but those only happen because there is not enough of power and we face oblivion, anyone not with us is against us, they threaten our future", and the fools that are scared will believe it, and they are the ones that allow everyone else to become slaves. Its part of a common authoritarian playbook, and has happened many times throughout history.
https://www.mit.edu/people/fuller/peace/war_goering.html
When you look at the requirements for clearing at a national scale, it requires a centralized system with coercive control, and absolute information (future sight). For the most part those systems only operate efficiently because of corruption, and there is no future sight thankfully.
It doesn't address a number of issues with any centrally planned economy and without incentives it must be centrally planned to produce goods. Having assets without being able to use them means no property rights. The borgeioux/monopolists take over and the common man only needs bare subsistence. That's fine in a pre-limits of growth world but we'll be at 9B people soon and predefined currency pool without expansion doesn't take into account population growth. So given contention, who decides who lives and has children, or dies and doesn't. In that kind of system, the people at the top.
You end up with no investment, no companies, and no future within a generation or two (20 years = 1 generation).
Inevitably shortages occur, and when they do it causes death when its a strategic good (i.e. food). That death also won't be coming to those at the top while there's such a larger pool below. The people at the top need the good more since they are responsible for decisions that impact the whole. Sometimes its necessary to cut off a leg so the body can survive. Its important that the designated people can continue to make these important decisions in times of crisis... so they would say.
You can tweak those systems any number of ways and end up with the exact same outcome when you don't address the core problem of economic calculation which doesn't have a solution in centrally planned economies. Its not new, its old, there's quite a large body of material from the 1920s-1940s on it.
This article seems to be extremely confused about the difference between increasing the supply of dollars (printing money or other tactics of the Federal Reserve) and deficit spending (moving already-created dollars from the public, including foreign holders, to the government and then right out to the U.S. public again).
I'm confused as to how that's different. Essentially the US can deficit spend an extraordinary amount, even if that deficit is financed, bc the US can simply print money to pay back the debt - without most of the drawbacks that normally come when you money is created out of nothing, BC the US dollar is the Global reserve currency.
Because it doesn’t print new money to pay it back. It could. But it doesn’t.
Is there an example of this happening? I'm supposed to believe that we ask for money back from foreign countries that have stockpiled dollars as their reserve to finance domestic spending - instead of just printing money.
Why would we do that?
Why would we do that?
We don't ask for dollars back. The government asks for a loan that pays interest and lots of people gladly want to make that loan - like probably your retirement investments. This is where the national debt comes from. If we printed money there would be no national debt.
Precisely. In fact a lot of reserves aren’t even dollars but are actually us treasury debt denominated in dollars. Treasury debt is treated as cash in most of the world because the treasury market is so liquid and it’s guaranteed by the 14th amendment of the constitution. no one wants to see the 14th invoked because a) it means our political system is so broken we are willing to default, b) it’s possible some conservative court would deny the clear language and take the backstop that insures the debt away. The 14th amendment though is basically supported by printing money rather than borrowing, which is the (c), as it’s diluting.
I wonder to what extent the Ukraine war partly an attempt to break this remarkable reserve-monopoly that the US has acquired since the 90s. Using its global projection of military power, the US has managed to open up and secure world trade to the entire rich world, and in the process made the USD indispensable. The US can keep printing for decades , and the USD is not getting debased. People in tech startups are aware of the advantages of low interest rates, being awash with money and using it to outcompete every threat. Not only that created monopolies, but easy capital made US tech cities the default and mandatory destination for entrepreneurs from all over the world, which has added quite a few trillion to the US economy. The US enjoys the privilege of being the last empire in a post-empire world and maybe military action is a desperate attempt to change that. Maybe it even contributed to the rates rise
Do you really trust China to manage the World’s currency?
Scenario: Monday: China buys 100 billion Yuan of oil from Saudi Arabia.
Tuesday; China prints 100 billion more Yuan.
Oops!
The only countries that the World mistrusts more than the U.S. … is everybody else.
Scenario: Monday: China buys 100 billion Yuan of oil from Saudi Arabia.
Tuesday; China prints 100 billion more Yuan.
Oops!
The only countries that the World mistrusts more than the U.S. … is everybody else.
> Do you really trust China to manage the World's currency?
No, they have terminal credibility issues when it comes to how they handle things, and its real hard to support something like that when you have no laws protecting foreign investors.
Netflix's The China Hustle was a great documentary providing visibility on these issues. A world currency is a foreign investment in any country that accepts and denominates in that currency.
No, they have terminal credibility issues when it comes to how they handle things, and its real hard to support something like that when you have no laws protecting foreign investors.
Netflix's The China Hustle was a great documentary providing visibility on these issues. A world currency is a foreign investment in any country that accepts and denominates in that currency.
You can't print bitcoin.
You can't print natural resources.
You can't print manufacturing capabilities.
Trade will work on verifiable assets in the future. If Bircoin picks up even a small percentage of foreign exchange it will be worth orders of magnitude more than it is now. A block chain with international trust is a valuable invention.
Trade will work on verifiable assets in the future. If Bircoin picks up even a small percentage of foreign exchange it will be worth orders of magnitude more than it is now. A block chain with international trust is a valuable invention.
Trust is a fickle thing, and requires credibility.
Not for long
This article has some significant misunderstandings about how these things actually are. The only potential reason would be to mislead the reader because it surely does not educate when a significant portion of what's said is wrong in a way that a layperson wouldn't be able to tell.
Specifically, it acts as if this is business as usual when it is not. The debt to GDP, and inflation rates, are not correct. It makes no mention of the requirements imposed by Basel III which is what banks are being held to now.
There is no deposit requirements anymore. In 2020, they set this to 0 and haven't returned it. Boys and girls we no longer have a fractional banking system. Let that sink in for a moment.
Everything we know historically about banking and economic trends is largely based upon the banking system being a fractional banking system. You can't have a non-fractional banking system and claim its the same, or will operate remotely similar. Its unprecedented and was barely announced if you didn't follow all the metrics available through their site.
As they've redone their site again to hide stuff, here is the link for those that want to check it out themselves.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
Basel III sets up capital requirements but allows stock market capitalization to be counted against those requirements. Making any bank very susceptible to market attacks, synthetic shares can be indirectly created using the market maker as a patsy; just like commodities can be suppressed with net0 options contracts between colluding parties.
Worse, the banks have centralized to the point where if any of the big primary banks now fails, none of the others have the assets to take it over. Which means the next step is nationalization, or inflate the currency even more than is happening currently (as a bail-in).
Banks and other financial organizations don't have to disclose changes in the underlying assets (bonds specifically) when they intend to hold them to maturity. You've got funds holding 90%+ of 1.8% bonds whose value is significantly lower than actual market value (because interest rates went up how many times?). Value is worth approximately 1/3 when I last calculated, but the going market rate is well above that. For those that don't know, its the sum of all interest payments and principal discounting inflation above 2% up to present date as calculated in 1984, and adjusting for the difference of the current interest rate bond compared to the 1.8).
Not only that, it mistakes what really happened with Gamestop (a short squeeze, and market weighted index rebalancing) or the M2 triggered liquidity issues (in 2019) that prompted payouts to the general public amid the pandemic because the banks weren't lending due to liquidity.
https://fred.stlouisfed.org/series/M2V
I seriously don't see much that is actually accurate in that post. Even the market growth part is misleading.
If you want a solid background on how these things work, read David Graeber ("Debt, The first 5,000 years") followed by the Economic calculation problem (essays). You run into the latter in non-market and market systems that deviate sufficiently from rational pricing.
Debt to GDP is well above 300% when you count all outstanding liabilities, the measure he references is what the government publishes but if you look at how they've changed that formula over time you'd see its just like inflation. Less about accuracy more about promoting a narrative.
Specifically, it acts as if this is business as usual when it is not. The debt to GDP, and inflation rates, are not correct. It makes no mention of the requirements imposed by Basel III which is what banks are being held to now.
There is no deposit requirements anymore. In 2020, they set this to 0 and haven't returned it. Boys and girls we no longer have a fractional banking system. Let that sink in for a moment.
Everything we know historically about banking and economic trends is largely based upon the banking system being a fractional banking system. You can't have a non-fractional banking system and claim its the same, or will operate remotely similar. Its unprecedented and was barely announced if you didn't follow all the metrics available through their site.
As they've redone their site again to hide stuff, here is the link for those that want to check it out themselves.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
Basel III sets up capital requirements but allows stock market capitalization to be counted against those requirements. Making any bank very susceptible to market attacks, synthetic shares can be indirectly created using the market maker as a patsy; just like commodities can be suppressed with net0 options contracts between colluding parties.
Worse, the banks have centralized to the point where if any of the big primary banks now fails, none of the others have the assets to take it over. Which means the next step is nationalization, or inflate the currency even more than is happening currently (as a bail-in).
Banks and other financial organizations don't have to disclose changes in the underlying assets (bonds specifically) when they intend to hold them to maturity. You've got funds holding 90%+ of 1.8% bonds whose value is significantly lower than actual market value (because interest rates went up how many times?). Value is worth approximately 1/3 when I last calculated, but the going market rate is well above that. For those that don't know, its the sum of all interest payments and principal discounting inflation above 2% up to present date as calculated in 1984, and adjusting for the difference of the current interest rate bond compared to the 1.8).
Not only that, it mistakes what really happened with Gamestop (a short squeeze, and market weighted index rebalancing) or the M2 triggered liquidity issues (in 2019) that prompted payouts to the general public amid the pandemic because the banks weren't lending due to liquidity.
https://fred.stlouisfed.org/series/M2V
I seriously don't see much that is actually accurate in that post. Even the market growth part is misleading.
If you want a solid background on how these things work, read David Graeber ("Debt, The first 5,000 years") followed by the Economic calculation problem (essays). You run into the latter in non-market and market systems that deviate sufficiently from rational pricing.
Debt to GDP is well above 300% when you count all outstanding liabilities, the measure he references is what the government publishes but if you look at how they've changed that formula over time you'd see its just like inflation. Less about accuracy more about promoting a narrative.
There are some opposing opinions on this being far far away. Recently the USD has lost a significant amount in global percentage mainly due to all the sanction the US imposes. The US treasury itself warned that these sanctions are bad for thr US. [1]
[1] https://www.livemint.com/news/world/yellen-says-sanctions-ma...