Having Enough Money To Fund Commerce

In the course of my writings and videos I discuss the subject of money a great deal. It is an area that I spent an incredible amount of time studying. Knowing things such as the intregal workings of the Fed, monetary history, the Eurodollar System along with other variables provides a lot of clarity about how things work.

Sadly, it also exposes a lot of the nonsense that it out there. Over the years, I spent a lot of time discussing these topics with people who are woefully unqualified to be speaking about it. They believe because they watched hours of YouTube videos or read some ideologue's blog, they are an expert.

Here is the reality: I know nothing about astrophysics or coding. Therefore, I do not pretend to have any insight into either.

If I did, this would be a concern if I started to delve into the code on Hive and messed around. Fortunately, I do not (nor would I be given access - also for obvious reasons).

When it comes to money, the same is not true. We have people who make decisions who are equally as inept. This does not apply only to cryptocurrency. It is a problem we are facing the world over.

For this reason, we will delve into the topic of money once again and show how things really work.

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Insufficient Money

Since 2008, the world has suffered from an insufficient amount of money. This is a reality in both the US dollar and Eurodollar systems. Both are breaking down, a fact we see impacting the global economy.

Of course, many will take exception to this statement right off the bat. They believe the nonsense of the Fed printing press "go brrr". Do these people realize this is not the 1920s? The only US dollars the Fed creates are banknotes and 70% of them are resident outside the US.

A lot of this stems from the fact people have no idea what money is. Hell, they can't be blamed. Alan Greenspan said the same thing in the June 2000 FOMC meeting. He said that finding money was becoming "a dubious proposition".

In short, the banking system completely changed what money was. This was, due in part, to technology. The rise of computing, i.e. digitization, altered this forever. Today, money is anything that is liquid and can be traded easily. The digital world obviously makes this very easy. Hence, as Greenspan also pointed out "the proliferation of products" from the financial system.

With this type of environment, you would think the backdrop would be for plenty of money. Unfortunately, the opposite happened.

To start, US dollars dried up as the US commercial banks slowed lending. Since Q3 2008, the rate of expansion of the money supply (dllar) was 1.03%. Remember, in fractional reserve banking, the digital legal tender is created by the commercial banks via loans. The central bank has nothing to do with this even though it claims to.

The second variable is the fact that bank balance sheets were constrained. This vastly altered the landscape for the Eurodollar System.

Going into the Great Financial Crisis, we had both private and public collateral being generated. The public realm was putting up sovereign debt while the private was pushing mortgage back securities. For those who were paying attention, think back to that point in time. MBS were rated the same as US Treasuries meaning the financial system could use them in the same manner.

Sadly, that turned out to be a lie and we quickly found out that the MBS were crap. Hence, we have a massive bank run with all these financial institutions running around trying to be made whole on their collateral.

Coming out of the GFC, we had different forms of sovereign debt. That worked for about 5 years until most everyone but the US blew up their bond markets. Europe went negative in 2014, in an effort to stimulate their economy. Much to the surprise of ivory tower economists like Lawrence Summers, it didn't work. What it did do, however, is destroy the bonds and notes for the banking system.

Commerce Suffers

Globally, this led to a constraint on balance sheets. Since 90% of trade is funding through the short term lending markets, this is a major problem. As balance sheets tighten, the system gets starved for money. Again, this is an issue on a global scale.

The TICData shows us what is going on. Major declines, especially in times of high prices, is a sign of a serious dollar shortage globally. Since the US is a net importer, that means payments flow out. Unfortunately, the TIC data is heading the opposite direction.

Ultimately, if there is insifficient money in actual circulation to meet the demand for commerce, economic conditions can only falter. This is what we are seeing across the world. This accelerated recently but it was a long term trend.

The last decade saw slowing growth rates. It was not too long ago that a 7% GDP rate for China was considered a bad number. Now they are projecting 4% (which is likely overstated by the CCP).

Therefore, contrary to what the general public believes, we are short money. Reserve by the central banks are nothing to the banking system, let alone the economy. The commercial banks have ignored these for decades. They realize it has no impact upon anything.

Collateral is the name of the game and that was shot to hell leading up to the GFC. Now, almost 15 years later, we are still grappling with the results.

Basically, we are short tens of trillions in global GDP due to moving off the long term historical growth trends over the previous century.

This is how humanity is ultimately being screwed. Yet, because they believe the nonsense the economic professors teach, they are completely blind to what is taking place.

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