There is a wide and deep misunderstanding of the modern monetary system and the causes of inflation. This leads to poor results for the majority of investors. For example, starting almost two years ago, the prediction by almost every analyst on the Planet was that a recession was ‘just around…

August is now finished and the fund-flow numbers are in: net-transfer for the month of August is +$258B (14% higher than last August), the net-transfer so far fiscal 2023, is +$1,579B (41% higher than last year at this time). This positive net flow suggests that the seasonal weakness around the…

In this article, we argue that, in the short-to-medium term, raising rates is the wrong way to lower inflation and that a recession is unlikely in 2023. Most central banks are hiking rates at present as a reflection of the dominance of the New Keynesian prioritisation of monetary policy as…

From a fundamental perspective, the debt-ceiling remains a fiscal and psychological drag on the stock market until the political and economic self-harming ends, but for now the spending can continue thanks to the Treasury cash balance (TCB) and the “extraordinary measures” available to the Treasury. In this piece, we are…

No matter what the semantic arguments are (QE, not QE, reverse QT…), the hard reality is that $400B of encumbered assets were added to the Fed’s books at par, and an equal amount of unencumbered money (liquidity) was released into the economy. This was not money-printing. This was not a…

Liquidity Breakout and the Restart of QE $300B addition to the Fed’s balance sheet (SOMA). The biggest and most sudden QE since the pandemic. This increase in liquidity is bullish.

Money is what releases real resources like labour and commodities, and government spending is how money is added to the economy (private sector bank accounts). Treasury budget-deficits represent the money that was left in the economy (i.e., not taxed back and cancelled). FEDERAL GOVERNMENT DEFICITS = PRIVATE SECTOR SURPLUSES Treasury budget-deficits are good for the economy, yet nearly everyone on this planet has it backwards!

Fear of impending recession, coming out of the Fed’s announced tightening cycle, has driven the herd out of the stock market. …

The class of reserves referred to as “other” are used to pay the quarterly Treasury interest on bonds. $40B — $50B is paid mid-quarter (August 15). In August of 2021, the SPX fell around the interest payment but rallied right after. This year, the same pattern could be developing. We might see a drop in the SPX over the next 2–3 days and then a rally until the end of the month.