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Geoffrey Fouvry Profile picture
@GraphCall
Aug 3 • 8 tweets • 2 min read • Read on X
1/8 Werner AT 44 minutes:
According to Banking School, Werner is correct again.
But using "money" for banks is a misnomer. It is called "bank currency" by the Banking school, let's explain why...
2/8 Bank currency is a liability of the bank. It is created either when you bring M0- money - to the bank (paper bills today, or coins in the past.
3/8 Bank creates bank currency by buying discountable articles of credit and issue a liability that is bank currency (what people call a deposit) ... It is not "your" money it is a liability of the bank , bank currency that is accepted as means of circulation.
4/8 Why does the Banking School call it "Bank Currency" and not "money".

Because Money is M0 the token, in PM redeemable currency M0 is the Gold or Silver coin.
5/8 In a fiat regime the M0 is the paper itself. Think about Cyprus in 2011 and you realize the difference.

Bank currency (what people call deposits) is a lliability of the bank, a promise to repay money on sight if a checking account.
6/8 Bank currency can fail and Cyprus showed that, but if you had "money" - M0- that is coins in a PM redeemable system you would be fine.
7/8 In Cyprus in 2011 the "bank currency" is redeemable in M0 too, that is ECB paper bills, so if you rush to the bank BEFORE the haircut on "bank currency/liability, aka deposits" you will be fine, but not with Bank Currency - Bank Liability.
8/8 In other words Bank currency can fail and is redeemable in Money (M0) - rush to the ATM.
Money is M0 is not redeemable in anything and can not fail as a form of payment.

Aside from this IMPORTANT terminology error, Werner seems to follow the Banking School.

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More from @GraphCall

Geoffrey Fouvry Profile picture
Aug 3
1/7 The view from Werner is interesting and does match the Banking School' view of Thornton (the third theory,
"Enquiry into the paper credit ..."
, which is classical economics BTW (practiced by the twitter account)
Now why have people erred since then? 🤷‍♂️
It is a mystery.
2/7
Thornton does not call bank currency "money". It calls it "bank currency", money being strictly M0 of the time PM. Bank currency can be created either by depositing M0 (money) or against a discountable article.
3/7 Agreed with Werner though, watching M2 is stupid because it confuses bank currency created by bringing M0 to the bank from central bank printing which has ZERO impact on circulation but only into pumping financial assets (bonds). What matters is the credit flow.
Read 7 tweets
Geoffrey Fouvry Profile picture
Aug 2
1/12 In this post we will show that the Yield control started in 2010, that yield curve control IS NOT SMALL and increasing. Image
Image
2/12 I am old enough to remember having a cup of coffee for well under 1 USD before going to trade risk arbitrage situations. Image
3/12 The Yield curve control started in 2010. A similar purchase of Exchequer bills by the BoE was done in 1823 and similarly people watching the low yield pondered
"WHAT IF?"
We are in deflation?
To which Thomas Tooke explained...
Read 12 tweets
Geoffrey Fouvry Profile picture
Jul 27
1/4 How the statistical US agencies are openly taking the bondholders for MORONS.

To calculate CPI inflation, BLS teams collect approximately 90,000 price quotes every month covering 200 different item categories, and there are several hundred field collectors active across 75 urban areas.

When data is not available, BLS staff typically develop estimates for approximately 10% of the cells in the CPI calculation. However, the share of data in the CPI that is estimated has increased significantly in recent months and is now above 30%, see chart above.

In other words, almost a third of the prices going into the CPI at the moment are guesses based on other data collections in the CPI." - Torsten Slok - ApolloImage
2/4 How we suspected it first and then pretty much KNEW it?
Sir Robert Giffen inferior goods substitution.
It is completely improbable that consumers shift to inferior goods if their real income is increasing.

3/4
 And confirmed in the last few quarters by the behavior at COSCO on cuts in dining out AND shift to lower quality meat cuts in all cohorts of consumers.
Read 4 tweets
Geoffrey Fouvry Profile picture
Jul 25
1/17 PART 3
LONG THE ARISTOCRACY, SHORT THE PEASANTS

The Necker Parallels
REGRESSIVE TAXATIONS AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY” Image
2/17 Rémy Cointreau had been disclosed as a trade (to paying clients ONLY) back in the low-mid 40 EUR range.
Rémy Cointreau sells the very exclusive $2,500-a-bottle Louis XIII Cognac, each bottled in Baccarat crystal and with a unique number.
3/17 The aristocracy makes MORE money with inflation and through exemption from taxes on inheritance and carried interests for hedge funds. In other words, they can absorb price increases.
Read 17 tweets
Geoffrey Fouvry Profile picture
Jul 23
1/21
- PART 2
REGRESSIVE TAXATIONS AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY”

Going into the details of the regressive nature of tariffs. Image
2/21 But judging by the deficit, the carried interests and estate tax exemption, a more nefarious one is at hand.
Since the Foreigners are balking at UST, some one has to pay for the Pork.
Who? The Plebs via tariffs.
3/21 KALECKI EQUATION:
IT’S SIMPLE: GOV SPENDING => CORPORATE PROFITS

In the Kalecki Equation Government spending does in fact increase Corporate profits.


So Fx as reserves is a fantastic way to boost corporate profits via pork.
Read 21 tweets
Geoffrey Fouvry Profile picture
Jul 22
1/15 REGRESSIVE TAXATION AND THE VASTER PROBLEM THEY REVEAL:
INABILITY TO TAX THE “AMERICASTOCRACY”
- PART 1
Kenneth Rogoff and Carmen Reinhart , in the book This Time is Different 👇 Image
2/15 In their book Eight Centuries of Financial Folly (and gov debt defaults, repudiation and inflate away), the authors explain the problem of taxation.
3/15 In the chapter on defaults on domestic debt, the authors note that in many historical episodes, governments found it politically easier to default or inflate away their debt than to raise taxes—especially on the wealthy.
Read 15 tweets

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