Now I Talked About A Global Recession
And People Go Well Isn't That Like Your
Liquidity Crisis, Not A Recession Or
Depression Is Very Different Than A
Liquidity Crisis Or Financial Panic
They're Two Different Things That Can
Account And Do Happen Separately On
October 19; 1987; We Had A Financial Panic
The Dow Jones Industrial Average Dropped
22 Percent In One Day; But There Were No
Recession In 1998 At Russia's Long-term
Capital Management Crisis And I Had A
A Front-row Seat On That When I Negotiated
The Uh; The Rescue About A Long-term
Capital Management; We Were Within Hours
Of Shutting Down Every Market In The
The World Is Just Hours Away The Deal Got Done
That Didn't Happen, But It Was Very Close
Dangerously Close To Happening More Than
People Will Realize We Had You Know
Finance Ministries And US Treasury In
The Federal Reserve And Every Lawyer In
New York Working On That One But I Was
You Know Kind Of Leading That And I Saw
How Just How Bad That Could Get But
There Was No Recession There Was No
Recession In The United States The
Nasdaq Was On Its Way To Uh You Know
Record Highs In The Economy Were
Expanding In 2000 We Had A Recession But
Did Not Have A Financial Panic Nasdaq
Dropped 80, But There Wasn't A Lot Of
The Leverage Involved In That Didn't
Spread To Uh Banks And Brokers And
In Other Institutions In 2008, We Had Both
In 2008 The Financial The Economic
The Recession Of The Depression And The
Financial Panic Converged So They Can
Happen Together, But They Don't Have To
They Can Happen Individually What We're
It Looks Like A Global Financial
Crisis And A Global Recession At The
At The Same Time Now Why Do I Say That Um
There's A Global Dollar Shortage Now You
Have To Look Behind The Curtain Not To
Get Two In The Weeds, But You Got To Go
Behind The Curtain Of The International
Monetary System And Understanding What's
There The International Monetary System
Is Not Driven By The Central Bank Sorry
Reserve Bank Sorry Fed You're Not In
Charge The Parties Who Are In Charge Of
The Euro-dollar Banks When The Fed
Prints Money Yeah They Printed Nine
Trillion Dollars, But They Do It By
Buying Bonds From The Banks And The
Banks Take The Money And Give It Back To
The Fed The Money Doesn't Go Anywhere
Just Sits On The Fed-down Sheet The
Money That Can Drive An Economy Is Comes
From Lending And Um, And Basically
Checking Accounts Where The Bank Will
Make Your Loan, Put The Money In Your
Checking Account And You Go Spend It
That Can Get Some Economic Growth
Going, But The Euro-dollar Market Is The
Major Banks Transacting Primarily In
Dollars, But It Can't Be Foreign
Currencies From Time To Time Outside Of
Any Regulatory Scheme Outside
Anything The Fed Sees Outside What
The Bank of England Sees Etc It's There
It's Big, But It's Amazing How Little
Central Banks Understand The Euro
Dollar System Now Here's The Point
There's Global Dollar Storage If
People Go Wait For A Second, The Fed Printed
Nine Trillion Dollars, Which They Did In
2020 Has Come Down Since Then, But They
Did Print That Much Money, How Could It
Be A Global Dollar Shortage What, People
Don't Understand Why Behind The
Curtain Off The Balance Sheet, There Is One
Quadrillion Dollars Of Derivatives And
They Have To Be Supported With
Collateral And The Collateral Is Not 100
Not Even 10 I Mean Kind Of One Percent
Or Two Percent Is Enough But When You're
In A Liquidity Crisis, Banks Are
Extremely Choosy About Which Collateral
They'll Accept To Support This
The Quadrillion-dollar Inverted Pyramid Of
Derivatives But, This Isn't The Date
Again, Not Anything That We've Invented
Well We See The Banks Are Saying I Don't
Want You, I Don't Want Corporate Bonds Is
Collateral I Don't Want Your Mortgages
As Collateral, I Don't Even Want 10-year
Treasury Notices Collateral The Only
The Collateral I Want Is Short-term US
Treasury Bills Have A
Maximum Maturity Of One Year 360 Days
But There Can Be Four-week Bills A
Weekday Those Six-month Bills Etc That's
The Only That's The Best Form Of
Collateral, So Most Liquids Are Easily Traded
Low Volatility Easy To Re-pledge Is By
The Best Form Of Collateral That's
All The Banks Want Right Now, But If
You're A Farm Bank If You're You Know
Barclays Will Actually Even The US Bank
City Or Whatever, But If You're Barclays
A Deutsche Bank Or Others And You Want
You Need Dollars To Buy The Dollar Base
Collateral, If You Want Treasury Bills
They've Generated Dollars, You Need
Dollars To Buy The Bills, That's Why The
The US Dollar Is So Strong, People Go Wait For A
Second, You Know The US Has You Know A
Multi-trillion Dollar Annual Budget
Deficit Uh Massive Trade Deficit Uh
132 Percent Debt To GDP Ratio, 31
With Trillion Dollars In Debt, You're Going
Into Recession, How Can The Dollar Be So
Strong, The Answer Is Everything I Just
Said Has Nothing To Do With The Demand
For Dollars In International Foreign
Exchange Markets What's Driving The
Demand For Dollars Is The Need To Get
Dollars To Buy Dollars Denominate
Collateral, Specifically Treasure Bills
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