BTCNews on Nostr: “Money Printer Go Brr!" From Arthur Hayes via Twitter (@cryptohayes): Swap lines ...
“Money Printer Go Brr!"
From Arthur Hayes via Twitter (@cryptohayes):
Swap lines what's going on?
TLDR another way to bailout non-US banks that isn't obvious to the average person.
It's politically toxic for the Fed to be seen bailing out foreign banks when so many small domestic banks need help.
But the Fed can't have foreign banks dumping treasuries into an liquid market and further fucking shit up.
Solution:
- Fed gives $ swap line to major CB like ECB
- ECB allows EU banks to give them treasuries at par
- ECB gives $'s to the banks
- Banks can now handle any $ deposit outflows
- ECB gets the $ from the Fed using the swap line
Result
- No treasuries are actually sold
- Any -ve pnl is borne by the CB, who can stomach infinite losses
- $ swap line balances balloon which will reflect on the Fed's balance sheet
$4.4 tn: amt of trsy and mbs us banks hold
$X tn: amt of trsy and mbs foreign banks hold, idk the number I'm sure some analyst will tell us
Long Term: all treasuries held in the entire developed country banking system can now be lent against at par
Money Printer Go Brr!
https://twitter.com/CryptoHayes/status/1637620774776315904
From Arthur Hayes via Twitter (@cryptohayes):
Swap lines what's going on?
TLDR another way to bailout non-US banks that isn't obvious to the average person.
It's politically toxic for the Fed to be seen bailing out foreign banks when so many small domestic banks need help.
But the Fed can't have foreign banks dumping treasuries into an liquid market and further fucking shit up.
Solution:
- Fed gives $ swap line to major CB like ECB
- ECB allows EU banks to give them treasuries at par
- ECB gives $'s to the banks
- Banks can now handle any $ deposit outflows
- ECB gets the $ from the Fed using the swap line
Result
- No treasuries are actually sold
- Any -ve pnl is borne by the CB, who can stomach infinite losses
- $ swap line balances balloon which will reflect on the Fed's balance sheet
$4.4 tn: amt of trsy and mbs us banks hold
$X tn: amt of trsy and mbs foreign banks hold, idk the number I'm sure some analyst will tell us
Long Term: all treasuries held in the entire developed country banking system can now be lent against at par
Money Printer Go Brr!
https://twitter.com/CryptoHayes/status/1637620774776315904