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Chaining 9/1/20

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The thread looked busy yesterday, but it really wasn't. It was just me chain posting out of sheer frustration. I promised not to do it again today. 

Meanwhile, speaking of chains, how do you like this chain? 

It sure looks orderly on the hourly chart. The number to beat to continue the uptrend here in the 5-6 AM hour ET is 3515. That's the top of a slightly descending range channel. That line will be at 3511 at 4 PM. Breaking through that line would be very bullish. Below that line, bears would still have a shot. 

Note that the multiple touch trendline was broken yesterday. The  after hours bounce set up a broader channel. The lower line of that is at 3495 this hour.  It rises to 3505 at 4 PM ET. Above that line, bulls are in charge. 

tvc_8b50cf97635965a25ddbe80581896b33.png

 

 

 

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  • DrStool changed the title to Chaining 9/1/20
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If the point is that all this money printing isn't inflationary, well fine. That's bullshit. There's plenty of inflation. They're not looking in the right places. They should try looking at the value

This argument that  QE are loans and not inflationary is now sweeping youtube and twitter. The premise is that the member banks buy Treasuries with reserves. However as Lee pointed out, the initial transaction is with the primary dealers not member banks. The primary dealers get paid in cash as a counterparty when they sell those Treasuries.  The misinformation is that the argument is assuming the member banks initially buy treasuries with reserves. Then the Fed buys the Treasuries from the member banks with more reserves. How in the hell do these member banks continue to buy trillions in Treasuries  with reserves that can never be spent?  Lee is my understanding correct that Primary dealers are not necessarily member banks, simply counterparties to the New York Fed. They get paid in cash when they sell Treasuries to the Fed or to member banks? They use that cash for other operations or buy more Treasuries?

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20 minutes ago, potatohead said:

This argument that  QE are loans and not inflationary is now sweeping youtube and twitter. The premise is that the member banks buy Treasuries with reserves. However as Lee pointed out, the initial transaction is with the primary dealers not member banks. The primary dealers get paid in cash as a counterparty when they sell those Treasuries.  The misinformation is that the argument is assuming the member banks initially buy treasuries with reserves. Then the Fed buys the Treasuries from the member banks with more reserves. How in the hell do these member banks continue to buy trillions in Treasuries  with reserves that can never be spent?  Lee is my understanding correct that Primary dealers are not necessarily member banks, simply counterparties to the New York Fed. They get paid in cash when they sell Treasuries to the Fed or to member banks? They use that cash for other operations or buy more Treasuries?

Even so called Experts have no Idea

Ask DiMartino Booth @DiMartinoBooth 

She has no idea. It's all about making money from subscriptions.  Tweeter is where they advertise for their services and take people money.

.

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1 minute ago, jp6 said:

Even so called Experts have no Idea

Ask DiMartino Booth @DiMartinoBooth 

She has no idea. It's all about making money from subscriptions.  Tweeter is where they advertise for their services and take people money.

.

I am getting that sense more and more. placating to certain asset categories that are hot buttons or emotionally charged subjects in order to get more followers and subscriptions. Whether or not they actually make money for clients is secondary.

 

This DEFI subject matter is next level $hit.

Honestly this Defi is more confusing than a kindergartener watching and understanding  The Big Short.

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9 minutes ago, potatohead said:

I am getting that sense more and more. placating to certain asset categories that are hot buttons or emotionally charged subjects in order to get more followers and subscriptions. Whether or not they actually make money for clients is secondary.

 

This DEFI subject matter is next level $hit.

Honestly this Defi is more confusing than a kindergartener watching and understanding  The Big Short.

 

From what I Could understand..

Lacy Hunt says Fed Money is not real money and QE money created goes into reserve with da primary dealers. with Reserve any loans that is being made comes out from Thin Air.

You can Check amount of Loans here

https://www.federalreserve.gov/releases/h8/current/default.htm

 

 

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What is the Monetary Accord Of 1951

The Monetary Accord of 1951 was an agreement between the U.S. Secretary of the Treasury and the Federal Reserve Board (the Fed). It is also known as the Treasury-Federal Reserve Accord. 

The primary accomplishment of the accord was the reestablishment of the Federal Reserve’s independence. This pact paved the way for the role that the Fed would play in modern American monetary policy as the country’s central bank.

 

Background of the 1951 Accord

The U.S. entered World War II in 1941. A year later, in 1942, the U.S Treasury asked the Fed keep interest rates unusually low to keep the securities market stable and to allow the government to borrow money at lower interest rates to finance U.S. engagement in the war.

Marriner Eccles was the Fed’s chairman at the time. He favored financing the war through raising taxes, rather than through low-interest loans to the government. However, the urgency of the war led Eccles to honor the request of the Treasury Secretary and keep interest rates low. To fund these low-interest loans, the Fed bought large amounts of government securities.

 

https://www.investopedia.com/terms/m/monetary-accord-1951.asp#:~:text=The%20Monetary%20Accord%20of%201951%20was%20an%20agreement%20between%20the,the%20Treasury%2DFederal%20Reserve%20Accord.&text=This%20pact%20paved%20the%20way,as%20the%20country's%20central%20bank.

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13 minutes ago, jp6 said:

What is the Monetary Accord Of 1951

The Monetary Accord of 1951 was an agreement between the U.S. Secretary of the Treasury and the Federal Reserve Board (the Fed). It is also known as the Treasury-Federal Reserve Accord. 

The primary accomplishment of the accord was the reestablishment of the Federal Reserve’s independence. This pact paved the way for the role that the Fed would play in modern American monetary policy as the country’s central bank.

 

Background of the 1951 Accord

The U.S. entered World War II in 1941. A year later, in 1942, the U.S Treasury asked the Fed keep interest rates unusually low to keep the securities market stable and to allow the government to borrow money at lower interest rates to finance U.S. engagement in the war.

Marriner Eccles was the Fed’s chairman at the time. He favored financing the war through raising taxes, rather than through low-interest loans to the government. However, the urgency of the war led Eccles to honor the request of the Treasury Secretary and keep interest rates low. To fund these low-interest loans, the Fed bought large amounts of government securities.

 

https://www.investopedia.com/terms/m/monetary-accord-1951.asp#:~:text=The%20Monetary%20Accord%20of%201951%20was%20an%20agreement%20between%20the,the%20Treasury%2DFederal%20Reserve%20Accord.&text=This%20pact%20paved%20the%20way,as%20the%20country's%20central%20bank.

Many are expecting a similar event (yield curve control of the 1940's) over the next few years where the Fed is forced to cap yields, in order to avoid massive defaults when rates rise. This is the inflationary theme that institutions and big money managers are focusing on.  I think it is one reason why both Powell and Lagarde were hired to run the Fed and ECB. They are both lawyers and skilled at the technical details if operations need to be adjusted or rules need to be amended.

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2 minutes ago, potatohead said:

Many are expecting a similar event (yield curve control of the 1940's) over the next few years where the Fed is forced to cap yields, in order to avoid massive defaults when rates rise. This is the inflationary theme that institutions and big money managers are focusing on.  I think it is one reason why both Powell and Lagarde were hired to run the Fed and ECB. They are both lawyers and skilled at the technical details if operations need to be adjusted or rules need to be amended.

You need a lawyer to Bend the law. Now we have them in the office.

 

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2 hours ago, potatohead said:

This argument that  QE are loans and not inflationary is now sweeping youtube and twitter. The premise is that the member banks buy Treasuries with reserves. However as Lee pointed out, the initial transaction is with the primary dealers not member banks. The primary dealers get paid in cash as a counterparty when they sell those Treasuries.  The misinformation is that the argument is assuming the member banks initially buy treasuries with reserves. Then the Fed buys the Treasuries from the member banks with more reserves. How in the hell do these member banks continue to buy trillions in Treasuries  with reserves that can never be spent?  Lee is my understanding correct that Primary dealers are not necessarily member banks, simply counterparties to the New York Fed. They get paid in cash when they sell Treasuries to the Fed or to member banks? They use that cash for other operations or buy more Treasuries?

Primary Dealers

Amherst Pierpont Securities LLC

Bank of Nova Scotia, New York Agency

BMO Capital Markets Corp.

BNP Paribas Securities Corp.

Barclays Capital Inc.

BofA Securities, Inc.

Cantor Fitzgerald & Co.

Citigroup Global Markets Inc.

Credit Suisse AG, New York Branch

Daiwa Capital Markets America Inc.

Deutsche Bank Securities Inc.

Goldman Sachs & Co. LLC

HSBC Securities (USA) Inc.

Jefferies LLC

J.P. Morgan Securities LLC

Mizuho Securities USA LLC

Morgan Stanley & Co. LLC

NatWest Markets Securities Inc.

Nomura Securities International, Inc.

RBC Capital Markets, LLC

Societe Generale, New York Branch

TD Securities (USA) LLC

UBS Securities LLC.

Wells Fargo Securities, LLC

 

Source: NY Fed

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I have no idea why this is all such a mystery to most people. How the Fed buys securities and how they transmit monetary policy is published, public information.  

The Treasury holds auctions. Dealers, hedge funds institutions, individuals, foreign governments, pension funds, insurers, and yes even a few banks, buy the Treasuries at the auctions. 

Some buyers pay cash. Many use leverage. It's called repo. I guess those people never heard of it. 

Do some banks use some of their cash to buy Treasuries? Of course. 

Again, this is not rocket science. I don't have any idea what their point is. 

 

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If the point is that all this money printing isn't inflationary, well fine. That's bullshit. There's plenty of inflation. They're not looking in the right places. They should try looking at the value of their houses to start with. 

No inflation, my ass. 

And let's just completely ignore the inflation of stock prices, and the previous massive inflation of commercial real estate, which has now crashed, only nobody knows it yet. 

 

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