Dec

29

So as Silver trades yet another stratospheric (psychological) target, there are a few questions. On commercial side, both Demand and Supply are price-inelastic. Whatever industrial uses are, Silver is hardly substitutable, especially at the time when other metals are just as pricey. And on new Supply side, much Silver gets out of the ground as a by-product from mines not primarily operating as "a Silver mine". So, again, Silver production can't be easily jacked up during Silver's rise.

On non-commercial side, however, it's the opposite. Supply/Demand balance works as it should. $77 (or $100 lol) market would cause Buyers to be abandoning bids; while grandmas might start dusting silverware off and storming pawnshops. Any other considerations?

Peter Penha responds:

Exactly - if you look at the Silver Institute Supply / Demand models it shows we have been in several years of deficits (still in deficit of course this year and next) - Mine supply peaked a decade ago

If you add up all the non industrial uses of silver (Jewelry, Photography+film (Chris Nolan & IMAX), and all silverware) they do not make up the deficit.

So in the Silver Institute model and I am talking 2023 $28 silver price we have some 20% of total ounces that need to be divested every year to maintain supply/demand.

60% of uses are industrial - solar is the future everywhere now….for those missing the US battery trade —> the Biden era tax credits for solar are now Trump credits for solar+batteries & the AI data centers are now going to be Bring Your Own Capacity and storage & connect to the grid.

Read the full post with additional comments.

Apr

5

VIX close over 40–without enumerating because there are often a bunch of close dates with closes over and under 40, but all linked etc:

1) 10/87 with VXO adjusted from 150, I'll call 'over 40' on the modern VIX
2) 8-10/98 Russian financial crises and associated other currency collapses
3) 2000 dot com period into 9/11
4) 2008-9 financial crises begin great recession
5) 8/2011 don't know this one even though I kind of recall it don't think this was flash crash….
6) 8/8/2015 not sure could look it up just counts at 40.74
7) 2/2018 this was XIV and vol related highest closing print was 37.32, but I have to think it traded about that day intraday
8) 3/2020 Covid lock downs
9) 2021-2022 during the lock down there were some spikes, don't recall why, but no closes
10) Today, 4 April, 2025

So kind of 8-10 (depending how orthodox one requires) VIX > 40 closes episodes in the last 40-ish years in terms of canes, We all knew about the tariffs coming , but I would say we all knew about the crappy lending in 07 too…. The others, pardon my youth I was in the scouts in 87, but I think had less general knowledge warning.

Some of these periods with VIX > 40 go on for a while. So definitely not a recommendation or a prediction just a comment about the unusually high level today.

Peter Penha comments:

5) 8/2011 was the debt downgrade of the United States from AAA by S&P - It of course led to a collapse in us government yields in the rush to safety as people had to think through it does not matter what you call or rate the safest asset as long as it remains the safest benchmark asset BUT some people said well if a 2nd ratings firm downgrades the USA then everyone who can only hold AAA assets will have to "dump their treasuries”.

6) August 2015 was the end of the tumble collapse of the Chinese Stock Market ~40% that led to a collapse in commodity prices - oil went from $100 to $40 (a Boston buyside technical analyst had $40 as his oil target and we all thought we would be in a 2009 deflation if we ever saw $40 again) - anyway was the fear of Chinese deflation everywhere - Think the Bank of China came in to sell down the volatility and stabilize markets.

I think in that recent YouTube video link I emailed - the speakers were discussing that in 2009 10 Year US Index equity volatility hit 40%.

I do have one anecdote told across the firm from 2008 from someone who made billions (or “more in 1 week than the firm had ever made globally in a year in derivatives”) in an uncapped covariance swap - he took all the capital from all the equity traders at the firm to put on his covariance swap bet at $100mm per 1% for SPX, Topix, DAX up or down - anyway the reason given was that he said that a top seasoned lifelong professional trader with top Sharpe ratio will second guess themselves and lose money in the chop when the VIX is over 34 - I remember this one as your mentioning covid lockdowns reminded me that Alberta Canda Pension lost some $2bn-$4bn in the blink of an eye selling a similar swap.

Feb

13

I paused Asindu-posted link at time-stamp 1.33.30, to turn your attention to 150 years ago - when Silver first got demonetized:

The Money Masters - The Rise Of The Bankers

Below is where we are this decade, at the 90:1 Gold/Silver ounce/ounce price ratio (click to expand):

Silver has a special place in my conscience, since I lost my first million on April 28th, 1987 - having misjudged the magnitude potential of COMMODITY EXCHANGE floor shenanigans, which cost me that much in mere minutes (of failed calendar spread execution) between the Limit-up lock and the Limit-Down lock in the May contract. I then managed to recoup, and by the end of 1989 achieved my goal of heading a COMEX member firm. Memoirs aside: the above Bullish-projecting chart is nailing the fate of Silver - as one of industrial metals of today. Take the above as note of importance to listers in the commodities space.

Stefan Jovanovich gets into the history:

Silver was not demonetized in 1873. Coin continued to be minted in record volumes and used for the China trade. Grant ended the wonderful arbitrage that had made the Treasury everyone's bitch by limiting the amount of metal that the Mint had to accept for exchange. So, no more bringing silver and asking for gold when the market had taken silver lower than the ratio set by the Coinage Act and no more bringing gold and selling it to the Mint to buy China dollars when the ratio was the opposite. The ability of the Congress to issue money was voided by ending all presumption that Federal debt could be legal tender. Greenbacks had to be exchanged for coin whenever presented to the Treasury.

Those remained the rules until 1914 when the Treasury and the Federal Reserve agreed that European central bank IOUs dud not have to be cleared in coin or specie.

Peter Penha writes:

My favorite metal Silver (at these prices) and relative to Gold both for the Gold/Silver ratio long term and in Ag's natural occurring parts per million of ore in mining vs Au. Stefan’s comment about changing les règles du jeu is a reminder that it will happen again as it always does to try to hold things together.

The US Government is adding to our debt at $1 trillion every 90 days. Gold mined annually ~3000 tonnes (~1.9% of above ground reserves) * 31500 ounces * $3000 = $ 283 billion dollars worth - I trust that more than 1/2 of that gold that is mined cannot ever come to market as taken directly by the Chinese government & other central banks directly now to offset that very US treasury printing press. The silver market is 25000 tonnes a pittance in terms of nominal value of $24 billion at $30 an ounce - this is added to our national debt every 2 1/2 days.

I understand the debasement of our national currency is the upside drift in markets this list teaches as the key thing to take advantage of long term via the s&p 500 and equities, but things do sometimes get out of line on a relative value basis.

The world’s 3rd largest producer of Silver is Peru (after Mexico and China) and iI read somewhere as part of a let’s move off the USD for trading commodities, that Peru as part of the construction of the giant deep water port north of Lima built by China/COSCO (with it's potential dual military/commercial use) has agreed to send all its physical silver output to China for processing.

Stefan Jovanovich comments:

I am not qualified to assess the usefulness of The Money Masters documentary to traders. Its description of the 19th century assumes that there was a continuing debate after the Civil War over the rules for "moneyness" - the quality that gives a paper and coin its status as legal final payment - and how much the government would supply. No. On those questions Grant as President won an unconditional victory: the government would have no control over the supply other than the Bureau of Engraving being responsible for printing the notes for each United States Bank. (Grant lost that argument with Senator Sherman; he wanted each bank to have the ability to order its notes directly from the printer because he knew how the Treasury monopoly over printing would reply in a crisis.)

"Gold" would not be the only form of coined money, but the dealers would no longer have the opportunity to engage in serial arbitrage in foreign exchange. The limits on the amount of silver that the Mint would exchange were not a restriction on the domestic money supply (I look to Peter to confirm this based on the amounts of silver dollars that survive to this day). The Panic of 1893 can largely be explained by the market's fear that Congress signalling was about to return the U.S. to bimetallism for foreign exchange - at the very time when the British were ending direct currency exchanges between India (on the silver standard) and the United Kingdom whose banks cleared everything in sovereigns.

Nov

30

When do we start seeing the effects of AI show up in national economic data? If you had invested $5K in a laptop and a word processing program, you could replace a secretary at multiples of the cost. When the web came in, there was Amazon squeezing out the costs of the middlemen.

But I don't see the savings for AI. I see lots of talk, some free programs, but in terms of real productivity, not so much. I'm also told that it's early days and I'm asking for too much in posing such a question, but I think we're now getting far enough into AI that it's not an unreasonable matter to bring up.

One thing that's clear is that AI isn't going to generate employment the way the last tech push did. But if it's going to really change the world as its advocates suggest that it will, those productivity gains should be apparent by now.

M. Humbert writes:

However AI productivity gains are measured, it’ll have to account for the productivity loss due to its high energy consumption. For the Austrian economics fans here. I’ve found Copilot to be a helpful time saving tool, so others probably do as well, so time savings definitely are occurring from AI use today.

Laurence Glazier responds:

Using it all the time, huge experiential benefit. Chatting to GPT every morning while reading Thoreau. Instant context. The other big breakthrough is spatial computing. All in the service of art.

Asindu Drileba comments:

From my experience, co-pilot and other LLMs, have not solved anything that could not already be done via ordinary Googling. Looking up solutions to code issues on stack overflow is no different from LLMs. And stack overflow is still better for some tasks (fringe computer languages like APL for example). LLMs are impressive, but are mostly just gimmicks. The only thing it has actually saved me time on is generating copyrighter material and filler text.

Jeffrey Hirsch adds:

Just had that discussion today about ordinary google still being even better than LLM Ais in finding info. Had some fun with AI editing and embellishing copy.

Asindu Drileba adds:

I suspect that the bad SWE job market is due to high interest rates, no AI. The SWE job market is enriched mostly by VC money. And VC money dried up when LPs withdraw to earn risk free money in treasuries instead of betting on start-ups whose success is on probability. I expect it to recover if interest rates come down to previous levels.

I think the LLM narrative was just something that tech executives parroted to show they had an LLM strategy. It's, Like how in 2018/2017 every executive had a "Blockchain" strategy. A lot of businesses assumed that LLMs would replace simple customer support jobs but they just saw their tickets pile up. Even the $2B valued, Peter Thiel financed, code assistant that would make you money on Up work as you sleep turned out to be a blatant scam.

Steve Ellison writes:

I don't have an answer for Dr. Lilienfeld's question about when AI effects will show up in productivity statistics. But I do hear anecdotally through my professional networks that AI projects are adding real value.

At the same time, Asindu is correct that the bad job market for techies, myself included, is more a consequence of rising interest rates–and I would add overhiring during the pandemic–than positions being replaced by AI. As Phyl Terry put it, "But this company [that announced layoffs] wants to go public so the better story is 'we are smart leaders using AI to become more efficient and profitable' vs 'we were idiots during the pandemic and have to lay off some people because we messed up.'"

Gyve Bones writes:

I find that the AI's ability to interpret my request and put together a coherent synthesis of several sources to be very helpful. Grok is nice because it provides a set of links to sources relevant to the prompt, and to related ??-posts and threads.

Laurence Glazier asks:

I usually have audio conversations with GPT rather than the older typed-in input/output. I just subscribed to X Premium to get access to Grok. Any good links for learning good usage? How nice Musk names it from the Heinlein novel.

Gyve Bones responds:

Check out the sample prompts Grok supplies on the [ / ] section in ??. The news analysis prompts for trending items is pretty cool.

Bill Rafter writes:

My business partner and I are in the process of marketing a new software application. Although we are rather literate, we have been running all of our marketing materials through Copilot, and we are amazed at the improvements Copilot makes to our text. It results not only in improved communication, but is a real time-saver. We even asked it to write a business plan, and it came back with a better one than our original.

Peter Penha offers:

I have not (yet) been on Grok but have found that the prompts do not differ very much across LLMs:

A Primer on Prompting Techniques, June 2024.

Prompt engineering is an increasingly important skill set needed to converse effectively with large language models (LLMs), such as ChatGPT. Prompts are instructions given to an LLM to enforce rules, automate processes, and ensure specific qualities (and quantities) of generated output. Prompts are also a form of programming that can customize the outputs and interactions with an LLM. This paper describes a catalog of prompt engineering techniques presented in pattern form that have been applied to solve common problems when conversing with LLMs. Prompt patterns are a knowledge transfer method analogous to software patterns since they provide reusable solutions to common problems faced in a particular context, i.e., output generation and interaction when working with LLMs. This paper provides the following contributions to research on prompt engineering that apply LLMs to automate software development tasks. First, it provides a framework for documenting patterns for structuring prompts to solve a range of problems so that they can be adapted to different domains. Second, it presents a catalog of patterns that have been applied successfully to improve the outputs of LLM conversations. Third, it explains how prompts can be built from multiple patterns and illustrates prompt patterns that benefit from combination with other prompt patterns.

This is earlier/shorter February 2023 paper - I am also a fan/follower of Prof. Jules White’s classes on Coursera why I flag the shorter/earlier paper as well.

Separate on the subject of AI - Eric Schmidt has a new book Genesis with Dr. Kissinger as a co-author (his last work before his passing) but Schmidt did a Prof G Pod Conversation released Nov 21st - in the podcast Schmidt goes over the threat from LLMs that are unleashed and noted that China in his view has open sourced an LLM equal to Llama 3 and that China instead of a being three years behind the USA on LLMs is a year behind. That China comment can be found here at 26:30.

Finally if anyone wants a great book I have read, on the history of the race to AGI going back to 2009: the Parmy Olsen book Supremacy on the histories of Sam Altman and Demis Hassabis is a wonderful read. Also breaks the world down between the AI accelerationists and the AI armaggedonists.

Big Al adds:

I do use Bard to learn or refresh my memory with R. For example, I am trying to use the "tidyverse" set of packages, and Bard is very useful when asked to write code for some task specifically using, say, tidyquant. The code almost never works first time cut & paste, but I can see how things are done differently and figure out what needs fixing. And I get answers to simpler problems faster than on Stack Exchange which is better for more complicated issues.

Laurence Glazier comments:

It's an inverted Turing test situation. The things that AI can't do help identify our humanity, our birthright.

Nov

14

Should the market cap of crypto currencies be included in money supply for macroeconomic purposes?

William Huggins replies:

I'd you cant use it to pay taxes it doesn't count (just another asset, like a stamp).

Kim Zussman asks:

Why not? They add because if you pay taxes with fiat you can buy merch with crypto.

William Huggins responds:

you can barter wine or chocolate for a ton of things online too but we don't count those either. if money is "anything taken as payment" then we have to get very serious about "degrees of moneyness" (hence m0,m1,etc). in that spectrum, its pretty clear that the only things on the list are legal tender so unless you live in the land of bukele, it doesn't count (also, whose money supply does crypto count as exactly?)

Peter Penha:

I will volunteer that there is no moneyness to crypto as it was determined a 100% haircut asset by the DTC.

I think this leaves Blackrock and other crypto ETF managers in the interesting position that they cannot include crypto ETFs in one of their asset allocation funds or a target date fund, etc - inclusion would pollute.

Crypto in the USA appears to be a walled garden - the only contagion I can see to the financial world would be to holders of Micro Strategy Convertible Debt.

Stefan Jovanovich writes:

The question you all are raising here has a history - how far can "the law" go to monetize promises to pay? Originally, the answer was not one step. The Constitution says that legal tender can only be Coin. Article I, Section 8.

The lawyers have been working around that limitation ever since. Their greatest difficulty has been getting around the literalist non-lawyer Presidents who keep following the actual instructions the People established by vote as "the law".

Success came with the Aldrich-Vreeland Act which authorized banks with Federal charters to form "currency associations". Those were given authority to issue emergency currency could be backed by securities other than U.S. bonds, including commercial paper, state and local bonds, and other miscellaneous securities.

Section 18 of the Act: "The Secretary of the Treasury may, in his discretion, extend from time to time the benefits of this Act to all qualified State banks and trust companies, which have joined the Federal reserve system, or which may contract to join within fifteen days after the passage of this Act: Provided, That such State banks and trust companies shall be subject to the same regulations and restrictions as are national banks under this Act: And provided further, That the circulating notes issued under this Act shall be lawful money and a legal tender in payment of all debts, public and private, within the United States."

Everything since 1908 has been a variation on that theme - "lawful money" can be whatever Congress says it is.

Bill Rafter comments:

I started this question because I am working on a slight variation of digitally quantifying inflation. With the loose definition of inflation being “too much money chasing too few goods”, then the “money” part should include all that can conceivably buy the “goods”. Since one can increasingly buy a whole lot of stuff with crypto, then crypto deserves inclusion. If one were to fast-forward to a time of massive currency instability (this is just a thought experiment), having included the cryptocurrency might have facilitated greater forecasting.

Stefan Jovanovich adds:

For me the paradox of Bitcoin is that it has been a spectacularly successful asset - like a share of Berkshire Hathaway stock bought in the days before Buffett even went public - but it has never been a money. If I had Bill's brain and cleverness, I would try to include in the calculations the sum of personal and corporate credit that the lenders cannot easily pull away from the table (the potential moneyness supply) and the amount of credit actually used; and then seek the correlations to the fluctuations in that spread. In the days before central banking, speculators watched the net supply of commercial paper as such an indicator.

Jul

15

Only some people agree, but the power industry believes there may be a demand-supply mismatch from AI data centers. Here are some summary views - from the American Nuclear Society's Nuclear Newswire (April 2024):

Major tech companies see artificial intelligence (AI) as something that will transform their industry, and there is a race to be first. When they look for clean, dependable power 24/7, nuclear clearly stands out as a good match. Constellation [the nation's largest nuclear utility] summarized it best in its recent forecast:
• AI and data center growth will drive power demand.
• Major tech companies are expected to invest $1 trillion in data centers over the next five years.
• In the next five years, consumers and businesses will generate twice as much data as all the data created over the past 10 years.
• AI data center racks could require seven times more power than traditional data center racks.
• Between now and 2030, domestic data center electricity consumption is expected to grow anywhere from 6.5 percent to 7.5 percent (335 terawatt-hours to 390 terawatt-hours).
• In its report, Data Centers 2024 Global Outlook, global real estate services company JLL has said that "AI is driving extreme scale for new developments with requirements now ranging from 300 megawatts (MW) to over 500 MW."

From the IEEE Spectrum (June 2024):

Scientists have predicted that by 2040, almost 50 percent of the world's electric power will be used in computing. What's more, this projection was made before the sudden explosion of generative AI.

From Data Center Dynamics (May 2024):

US utility Dominion expects to connect 15 more data centers to the grid in Virginia over the course of 2024, after connecting 15 facilities last year totaling almost a gigawatt of capacity [1 gigawatt = 1 nuclear plant]. In its most recent earnings presentation this week, the company said it had connected 94 data centers with more than 4GW of capacity in Northern Virginia since 2019. This included 15 data centers totaling 933MW in 2023, and 15 more are due to be connected in 2024. The company didn't include the capacity of those 15 facilities going live this year, and in the earnings call, CEO Robert Blue said he doesn't know how quickly they will ramp up to full capacity.

For those who think new nuclear power is the solution (2024), this is not a quote but a fact: The new Vogtle nuclear power plant took about 20 years to design and build, from concept to commercial operations. This recent construction schedule was set by an experienced nuclear utility that previously built access to transmission on a nuclear site they've owned for decades.

The critical metric is not the overall demand. Data centers' demand sits on the grid 24/7, so generating capacity must be available 24/7. While massive amounts of energy are already oversupplying some US power markets, most new sources originate from part-time wind, solar, and battery assets. Those part-time assets cannot serve the 24/7 load demanded by data centers. Therefore, the critical metric is the difference between the base supply and the constant load.

With growing 24/7 demand, a fleet of legacy power plants (natural gas, nuclear, coal) is needed to fill in the [significant] gaps left by part-time renewable energy sources. That fleet currently exists, but its overall capacity is declining. Retired plants (to the extent they can be summoned) and new generation will be needed.

However, any new base generation will experience poor capacity factors and difficult gross revenues. Both impair investors' revenues and erode their expected levelized cost of energy. Even if investors overcome profitability concerns, the time it takes to commercialize any new traditional generating asset exceeds the expected demand for new power (extreme example: Georgia Power).

These projections and concerns appear to contradict current trends. Demand has declined in the United States, Europe, and the United Kingdom. Current reporting suggests there could be too much supply, particularly in Europe. However, if projections described by ANS, IEEE, and utilities are correct, the opposite problem could be presented: insufficient supply. If supply becomes the issue as expected, scarcity curves will be taxed, unprofitable generating assets will become profitable, and residential, commercial, and industrial consumers will pay more. This issue is not limited to North America.

Humbert H. writes:

I was listening to an interview of some fund manager from Reno earlier today and he was talking about power shortage around where he lives due to AI server farms. He said they could be quickly and cheaply addressed with new gas powered plants, but due to the Biden administration now requiring all such plants to have complete carbon sequestration this stopped them from being a practical solution.

H. Humbert writes:

Increased the energy supply for data centers is the obvious and near-term brute-force solution. Of course (almost) everybody not in the tech industry assumes that the joule per bit per second for data centers can't be improved and hence producing more energy is the only solution using nuke. In fact Sam Altman said that too, what conventional thinking can possibly go wrong, right?

Zubin Al Genubi asks:

What would be a good way to invest in modern nuclear power? How about Bill Gates project?

Asindu Drileba adds:

I would suspect via buying Uranium ETFs? I first saw this conjecture from following the financier Lyn Alden.

Mark Zuckerberg of recent also mentioned in an interview that Energy and not Compute will be the number 1 bottle neck to AI progress.

H. Humbert responds:

The energy being the presumed AI investment proxy won't last in the long term. Increasing the energy supply is just an incremental engineering no-brainer approach to solve a longer term problem and the approach is not disruptive and it doesn't change the world.

Stefan Jovanovich offers:

Radiant Nuclear
Kaleidos: a Portable Nuclear Microreactor that Replaces Diesel Generators

Peter Penha writes:

A relevant interview on the Hidden Forces podcast with Brian Janous who was hired by Microsoft in 2011 to focus on energy (Google had just hired someone themselves as they thought the cloud might become something) - wound up as VP of Energy.

AI data centers need to be where they can individually draw the electricity of a city like Seattle (800 MWh) - so away from major urban areas - discusses the history of the grid from Sam Insull through to where we are going…also on the efficiency / consumption of AI chips - his view with AI is Jevons Paradox will apply and the more efficient the chips and the (new) grid gets the more consumers will demand.

Dec

17

Thanksgiving menu at the Plaza Hotel, 1899.

From the NYPL collection of menus.

H. Humbert comments:

All under a dollar. Special holiday dinner for well-to-do customers. Anyone wants to make the case that those who deliberately cause deficit spending are not deranged animals? Is this price change good? Milei just said he will abolish the Fed of Argentina. Non negotiable. Of course he didn’t kill himself, I mean if there are ever any health problems in his immediate future.

Stefan Jovanovich offers:

The BW recommends Turback's book, What a Swell Party It Was!: Rediscovering Food & Drink from the Golden Age of the American Nightclub; it has menus and venues from the great age of actual fun and dancing.

William Huggins writes:

looks like every single government since the 1950s were full of "animals" - not a single one seems capable of maintaining a surplus for more than 3 years (and that was Clinton…):

United States Federal Government Budget

Andrew Aiken adds:

There was never a surplus in the 1990s, at least by the accounting principles that a business is required to use. The “surplus” was entirely due to short-term overages in payroll taxes for Social Security, and they were wasted and not used to shore up the system.

Stefan Jovanovich comments:

Since the purpose of central banking is to allow legislatures to increase their debts, is it surprising that "deficits" are now the cultural equivalent of what "sin" was in the ages when most everyone went to church? Everyone is against it, in principle, but not where principal and interest are concerned.

Larry Williams applauds:

+10 QUOTE OF THE DAY!!

William Huggins responds:

i wouldn't say the "purpose" of centrals is to enable money printing, rather I would say that's how governments prefer to use centrals but since the last of the independents were taken over by the end of WW2, that may have become an irrelevant distinction in the modern world. the main reason for pointing it out is that we could easily return to a world without state controlled centrals and their purpose would be notably quite different (usually running the payments system, think Amsterdamsche Wisselbank).

Stefan Jovanovich replies:

The Federal Reserve does not print our money; the Treasury does. In allowing its member banks to hold Federal government IOUs at par as their reserves, our central banking system effectively outlaws the pricing of all legal tender. Actual money can only be exchanged for itself, whatever the amount. The result is a wonderful inversion of monetarism as a theory. Money can be printed, without limit, but only if Congress votes to expand the supply of collateral that the banks can buy and endlessly rediscount.

William Huggins disagrees:

this is incorrect - the Fed can and does use several other assets aside from federal government debt to back its liabilities. back in 2010, they held more mortgage debt than government debt. the choice of backing asset is often dominated by gov debt but the BoJ (among others) is also sitting on corp debt (and equity for that matter)

Peter Penha writes:

I disagree and it is because of who is on the hook first. The Federal Reserve can only purchase government guaranteed debt for its account (including FNM FRE GNMA which it did in GFC and in amounts greater than existed - the w/i mtge owed the Fed at one point was around $1 trillion and at a spread below treasuries when adjusted for the embedded prepayment option by the borrower.

All the MS pledging boxes of toilet paper at the Fed window in late 2008 & the HY ETF purchases in March 2020 were against a Treasury guaranteed account at the Fed. If you care to argue that in difficult times there is no difference between Fed & Treasury as the Fed takes orders, that there is a myth of central bank independence - no argument.

The Fed now losing some $200 billion a year from it asset/liability mismatch is putting those losses against a future Treasury payments owed account - so the Fed does not need a capital call from its losses. If however the Fed decided it did need capital - that gets taken from its shareholders who are the money center / fed member banks. JPM is on the hook for Fed insolvency (or BAML and C trading below book tell you they will be forced sellers of equity below book to shore up their capital).

Perry Mehrling (the professor Zoltan wishes he had had in college) does a great history course (and free) on the hierarchy of money, and how private (CHIPS) and public (Fed Wire) clearing houses are allowed to create credit out of thin air to make up for shortfalls - guaranteed by all the other members.

Your money deposited in the bank is not money it is you extending credit to the bank and an IOU (down the tier). In normal times they all appear equal and settle normally but a Eurodollar is not the same as a dollar (see SVB dollar deposits made whole / offshore SVB deposits a general creditor (gone) as per the FDIC statement on SVB).

Stefan Jovanovich suggests:

Money and Empire: Charles P. Kindleberger and the Dollar System

Oct

30

I can only do a few paragraphs at a time there is so much in this book; turns thoughts upside down.

One I just read; Thomas Jefferson's illicit affair and fathering a child with his slave. Wait! Hold on a moment —while widely believed— all the DNA tests shows is there is Jefferson bloodline. That’s all it can show. There were 26 Jefferson's living in the area and Toms brother Ralph was caretaker and overseer of slaves.

Thomas? Ralph? Someone else? Will never know for sure but for sure it may well have been another Yet the revisionist historians have hung it on Tom. Lots more like this.

Peter Penha writes:

Just an anecdote on your example: I know of two families where a child was fathered/sired with a female who was a slave or an emancipated slave. Both families discuss it as part of the family history and each specified that a home was built for the mother/child and in one case the family name given to them.

Considering Thomas Jefferson finances, perhaps the answer would lie in the building records and who owned the home in Charlottesville where Ms. Hemings moved to after Jefferson's death with her sons.

I was recently searching for other books by Frederick Lewis Allen as IMHO a wonderful writer and objective historian of his day and that brought me to a series titled the Forbidden Bookshelf (27 books in the series) - I only picked up Allen’s The Lords of Creation but there were a few titles that were “out there” as subject matter.

Gyve Bones adds:

There was a lot more inter-mixing between Africans and French colonials in the Louisiana colony, which had a Code Noir body of ordinances governing who could own slaves (only Catholics, no Jews nor Mohommedans), and how they must be treated. As a Catholic nation France required that owners of slaves must educate and raise their slaves in the Catholic faith, and could not break up families in a sale. Slaves could purchase their own freedom, and in New Orleans there was a large population of "free people of color". Many of the wealthiest of these freedmen were slave traders, and there were several large plantations in French colony owned and operated by free persons of color. Slavery was not a racial thing—just a matter of property. There was much less stigma around the idea of "race", and that culture has persisted to an extent into current day New Orleans, although those seeking to divide people along racial lines for political purpose have made significant inroads in destroying inter-racial comity in that community.

History records that French Canadian trappers had very good relations with the indigenous populations, and there were many such mixed marriages made. This same phenomenon was seen in Mexico after Our Lady of Guadalupe converted 9 million indigenous Mexicans to the faith. The Mexican nationality gave birth to a new "mestizo" race which came about when the Spanish intermarried with the native population.

Zubin Al Genubi suggests:

Trust by Hernan Diaz. Pulitzer prize. Stories About a stock market operator in 1920's and his wife. Very good with minor market relevance.

Stefan Jovanovich links:

Sally Hemings

Nov

20

The Fed talks of the transitory nature of inflation and not raising rates, meanwhile Treasury is offering I bonds at 7% yield to small investors. Seems
to be a disconnect.

Peter Penha responds:

I Bonds Purchases are limited to US$10k a person, the extra coupon is indexed to the Urban CPI (why higher - nothing funny or contradictory it is formulaic)…this was all seen in advance by I series holders who track the urban CPI (which if you believe the rent increase stories - should remain high).

The FAQ is here: Series I Savings Bonds FAQs

Separately I do believe everyone should have a treasury direct account (was made a little more difficult to open one during the GFC) but no fees of any kind and you can leave your money as a certificate of indebtedness (C of I) of the US treasury with 24 hour withdrawal/ credit to any banking institution & you jump the queue among indirect/direct bidders on any US treasury auctions and I believe I read years ago that the original legislation (Ron Paul was part of it) guarantees you cannot be issued at a negative interest rate even if rates are negative for financial repression purposes.

Was about putting the little guy/gal first.

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