Andy Costan Interview on Blockmacro

A wholesale bank’s liabilities are repo borrowings, not deposits. This places US Treasury notes and bonds at the very centre of the modern monetary system. Lately, bank regulators have been attempting to further reduce and even remove Treasuries from capital ratio requirements. This should allow banks to significantly expand wholesale bank lending

The short-term debt cycles of ups and downs typically last about eight years, give or take a few.

What should we do about this fact? Does this throw off market signals about what the bond market is telling us, since the “bond market” in reference to actual private bond investors is less than half of the recent Treasury demand, while a semi-government institution is more than half of Treasury demand, against a backdrop of record Treasury supply

The orange line could occur if a lot of private European and Japanese investors buy un-hedged Treasuries in a risk-off move, which would delay the need for increased U.S. debt monetization by the Federal Reserve. Either way, I expect down for the dollar in the multi-year long run, but the path to get there has these two main outcomes, in my view.

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À partir de 2015, le recours à l’assouplissement quantitatif du crédit, le quantitative easing (à la suite du Japon, des États-Unis et du Royaume-Uni), désormais, inconditionnel, change la donne.