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  • Greece: Should I Stay Or Should I Go... [View article]
    The greek primary surplus is somewhat of an illusion. They received more than $4 billion from the EU in subsidy payments last year. Without including that, which would obviously go bye-bye in the event of default, they have never actually achieved primary budget surplus.

    I am still in favor of greek default done right as it would allow for better mid/long term outcomes
    Jun 19, 2015. 03:00 PM | 1 Like Like |Link to Comment
  • When You Look Back On This Moment In History [View article]
    When you look back at this moment in history - will this be the time when the last person leaves his funds and he finally turns out the lights. We can only hope that people stop giving their money to people who are essentially perpetually wrong in their investment advice
    Jun 15, 2015. 06:55 PM | Likes Like |Link to Comment
  • Analyzing The Crosscurrents: A Maturing Expansion [View article]

    I think you missed a fourth reason for the growth in consumer spending the last few decades. Not just refinancing, but the massive increase in total debt stock outstanding was used to consume more.

    Right now, C&I has rebounded, but consumer level debt has not really, after you adjust out student loan debt. And you can make the argument that the student loan debt increase in the past 7-8 years has been for marginal majors (anything with a studies, and most of the soft humanities) that cannot find employment and therefore was essentially wasted spending that i would never attribute a multiplier to.
    May 29, 2015. 09:46 AM | Likes Like |Link to Comment
  • Greece Says That It Will Default On June 5th, And Moody's Warns Of A 'Deposit Freeze' [View article]
    The reason is that because no one outside of the troika is holding a material amount of greek liabilities.

    Lehman was so devastating because it triggered runs on MMA's when the rumour went around that weekend that someone would "break the buck" come monday morning. It turned out it was the reserve fund. That triggered half a trillion outflow by 3pm that monday and started the panic.

    No one wants to own greek liabilities, unlike lehman. So no, i really don't think there will be an issue this time.
    May 22, 2015. 12:31 PM | Likes Like |Link to Comment
  • Greece Says That It Will Default On June 5th, And Moody's Warns Of A 'Deposit Freeze' [View article]
    If Greece defaults and the Greek banking system collapses, stocks and bonds will crash all over Europe. Many believe that such a crash can be "contained" to just Europe, but that is really just wishful thinking.

    What evidence is there that this is true? None really. Exposure to non-governmental greek liabilities outside of greece is minimal. And almost all of the exposure to governmental liabilities is held by the troika.

    The losses incurred by the IMF and EFSF and european central banks will have little effect on the european, UK or US banking systems, nor will the reduction in value of less than 40 billion Euro's of loans held by banks outside of greece. There is enough equity in the US, UK and european banking system to weather 40 billion euro's in losses.
    May 21, 2015. 12:05 PM | 2 Likes Like |Link to Comment
  • Yes, The Fed Does Directly Influence The Broad Money Supply Through QE [View article]

    The FED doesn't buy it from you. A bank buys it from you. The bank credits you with increasing your demand deposit account at the bank.

    At this point, you no longer have a $100,000 treasury cert, but do have a demand deposit account at teh bank with $100,000 in it. So you are still where you were in terms of net financial assets - in this case $100,000 demand deposit instead of $100,000 treasury security.

    The bank now has your bond (asset) and also a liability (the funds in your demand deposit account. The bank now sells the bond to the FED. The bank no longer has your bond and now has a reserve account (asset) at the FED with $100,000. So now the bank has an asset (reserve account at the FED with $100,000) and a liability (the $100,000 in your demand deposit account)

    The FED now has your $100,000 bond (asset) and has a reserve balance to the bank (liability)
    May 7, 2015. 01:35 PM | 2 Likes Like |Link to Comment
  • Doubling Down On Silliness [View article]
    but in a world where Central Banks are severely limited (legally) in what they can do I just don't see the transmission mechanism through which Central Banks can achieve this.

    Cullen: If the congress and the president were to sign a law tomorrow that granted the fed the ability to purchase any security with any duration, would Sumner's expectation argument regarding ngdp targeting become feasible in your view?
    Nov 3, 2014. 12:52 PM | Likes Like |Link to Comment
  • Student Loan Debt Crisis Debunked [View article]
    Lets get some new data to show that the problem is getting worse.

    In 2012 there were 23 million enrolled college students. Fall 2014 admission was only 21 million.


    In 2012 total student loan balance outstanding was $1,131 trillion. In 2014 total outstanding student loan balance had increased by 143.3 billion to $1,274 trillion (this amount is before enrollment of 2014 academic year: balance is as of June 30, 2014).

    Source: G.19 report from the fed at

    So admissions are actually declining but loan balances are still increasing substantially. Of course, this in no way whatsoever could have an effect on spending by these individuals as the author of this article portends.

    Oct 20, 2014. 11:43 AM | 1 Like Like |Link to Comment
  • Japan's Public Debt Problem Will Have Global Implications [View article]
    The examples you site are completely wrong.

    Greece has no control over its currency. The European Central Bank is the only entity that can issue Euro's - Greece cannot. Greece is a currency user, not a currency issuer

    The argentine debt in question was issued and payable in US dollars. Again, Argentina has absolutely no control and cannot issue USD.

    Again, i reiterate. Every JPY outstanding under JGB's will be paid at 100% face value. The only question is how much inflation will result.
    Oct 1, 2014. 12:18 PM | Likes Like |Link to Comment
  • Japan's Public Debt Problem Will Have Global Implications [View article]
    There is zero probability of default. Japan is a sovereign currency issuer. Every JGB will be paid at 100% of face value. The only question is how much inflation will result, not if default will occur.
    Sep 30, 2014. 04:55 PM | 1 Like Like |Link to Comment
  • Long-Term Outlook - Bleak! [View article]
    Good article.

    I would add a 5th concern. Decline of real entrepreneurship. Too much wealth creation through rent seeking behavior is occurring today versus real wealth creation through entrepreneurship.
    Sep 29, 2014. 03:33 PM | 3 Likes Like |Link to Comment
  • A MMT View On The Theory Of Hyperinflations [View article]
    Hyper-inflationary events are typically born out of either (a) civil war or (b) losing a war while being invaded. They don't happen outside of exogeneous events.
    Sep 29, 2014. 02:07 PM | Likes Like |Link to Comment
  • What Everyone Remembers That Never Happened: Why Job Growth Will Be Revised Down [View article]
    FYI, for a while now, on a yearly basis, the employment survey results are tracked against state unemployment data. There is no longer a massive lag of up to a decade to refine the employment data. While not realtime, the adjustments are made after each year end to track to state unemployment data.
    Sep 17, 2014. 11:29 AM | 1 Like Like |Link to Comment
  • Who Determines Interest Rates? [View article]
    Excess reserves are a result of changes in the FRB balance sheet. That is why
    Sep 10, 2014. 06:37 PM | Likes Like |Link to Comment
  • Who Determines Interest Rates? [View article]
    Just a technical notation: the bank can keep vault cash and since 1959 those are considered legal reserves.

    With that notation, I agree with what LJK said.
    Sep 10, 2014. 06:36 PM | 1 Like Like |Link to Comment