Apparently, no one else does. While I am at it, let me also point out that "the money supply" is very heavily dominated by credit money (or what is referred to as "inside money"). Inside money is the temporary money created by fractional reserve banking loans. The Fed does have indirect influence over this via control of the interbank loan rate (i.e., the Fed's fund rate, or the wholesale price of money). But the most important factor is demand for credit, which rests with the private sector.
Any recommended sources to understand your pov in greater detail? Some consider this as a worthy intro; The Price of Time: The Real Story of Interest by Edward Chancellor
I hadn't known of Chancellor's book until just now. It looks to be quite a good read. My interests run more to the detailed workings of the Fed and Treasury. I don't know of any single work that by itself paints a complete, up to date, picture. But I am about to post in the economics forum, I think?, the draft of a project I've been working on which I think you'd likely find interesting. It's title is "The Essential Nature of Deficits, Debt, and Taxes" and that includes references. The work that started my keen interest in what I could refer to as "government money operations" , was L.Randall Wray's, "Understanding Modern Money", He wrote this in the 1990s and it has become recognized as one of the foundational works in what's today known as Modern Money Theory. (It seems there may be a lower priced new addition of Wray's book out with perhaps altered title.) Wray who is a Minsky protégé includes a beautifully detailed history of money and then traces through the work of avant garde (or heterodox if you prefer) economists of the 20th Century that led ultimately to the realization of what is probably the biggest bomb dropped into the midst of traditional thinking by modern money theory economists. And that is the assertion that our Federal government finances itself through money creation. This leads to even more uncomfortable revelations that are difficult for one to wrap ones head around, i.e., taxes and borrowing are not used to finance government, but are needed for entirely other purposes. (Kelton says Warren Mosler is responsible for the name "Modern Monetary Theory") I thought it was probably Minsky who is responsible for realizing that one has to think of money in the economy as either "inside" or "outside" money. Now after reading Minsky's critique of Keynes, I think it was more likely Keynes that originated this way of thinking about the origin of the money in our economy. It's money generated via Bank credit that is inside, and money created by government that is outside. This is an absolutely critical concept to understanding the MMT economists. Most of the money in the economy is of the inside type. That is to say when we speak of the money supply we are speaking mainly of money generated via bank credit. And this is of course all temporary money, as it disappears when a loan is paid off. Of course it's the level of demand for this inside money that the Fed is trying to dampen when it sets on a course of "tightening." But as everyone knows, our zeal to borrow in order to spend is affected non-linearly by changes in interest rate. Or said another way, we want what we want when we want it, and rates be damned.
Recession fears Investors are getting skeptical that the US can avoid a potential recession, with yields on US and German 10-year bonds trading well below the rate on two-year securities. The inversion in the yield curve deepened on Friday to levels seen just before the regional banking crisis roiled markets. Markets appear worried that central bankers’ zeal to rein in inflation will crush economic growth. US data on Thursday suggested the economy is holding up but losing steam, which Bloomberg Economics referred to as a potential “sea change.”
US bond traders seek edge by adopting tech -report Matt Tracy Wed, June 21, 2023 at 1:05 PM EDT·2 min read By Matt Tracy June 21 (Reuters) - U.S. bond investors are coming around to using technology more to trade fixed-income products, as they seek to inject efficiency into processes that are still largely done manually, a study by financial analytics firm Coalition Greenwich said. Traders have slowly adopted execution management systems (EMS) in their workflow to enhance their execution capabilities as the market evolves, wrote Audrey Blater, senior analyst at Greenwich, in a report released on Tuesday. The fixed-income market adoption of EMS is at "a tipping point" where some traders, while reluctant to use technology, "acknowledged a change of habit is imminently necessary," said Blater. Data-producing channels have expanded over the past five years to include many new factors: execution protocols, dealer prices, evaluated prices, liquidity scores, a plethora of communication pipes, and enhanced post-trade regulatory reporting, she said. Legacy methods such as order management systems and phone calls or chats, however, "are 'seeing' a smaller and smaller fragment of the overall market, limiting the liquidity picture and pre-trade transparency," she said. The tech makeover of a market that sees billions of dollars of trades in a year though is still gradual. The study found that only 39% of some 41 senior fixed-income traders in US asset management firms, hedge funds and insurance companies, identified using an EMS. Some 34% of the 41 traders in the study looked to chat to execute trades, versus 27% that turned technology as their top choice. "While we are still in the early innings of EMS adoption, it's clear there are meaningful advantages to turning to this technology to navigate today’s markets," said Blater. "The direction of travel is clear: Sooner rather than later, legacy methods just won’t cut it anymore," she added. (Reporting by Matt Tracy; Editing by Shankar Ramakrishnan and Conor Humphries) https://finance.yahoo.com/news/us-bond-traders-seek-edge-170515498.html
Yes, of course. The main component of the Money supply is virtually always inside money created by fractional reserve bank loans.
Banks, not the FED, are the ones that create money. We have 4 types of money in the financial system: 1-Cash: Issued by the United States Government, which is accessible worldwide and with a nominal size of $2 Trillion dollars. 2-Bank Deposits: Issued by commercial banks, with global access and with a nominal size of $16 Trillion dollars. 3-Central Bank Reserves: Issued by the Government, accessible only to commercial banks and with a nominal size of $3 trillion 4-Government Treasury: Issued by the United States Government, global access AND with a nominal size of $20 Trillion Dollars. In a functional financial system, all forms of money are freely convertible with each other. When that conversion breaks down, serious problems arise in the financial system. when the Federal Reserve buys $1 Trillion in US Treasury securities, it creates $1 Trillion in central bank reserves to pay for it. That happens whether the seller of the Treasury bonds is a commercial bank or a non-bank. If the Fed purchased a commercial bank's Treasury security, then the commercial bank's Treasury security asset is exchanged for central bank reserves. If a corporation were to sell $1 billion in Treasury securities to the Fed, then the proceeds of the sale would be deposited with the commercial bank with which the corporation is registered. The Fed would add $1 billion in reserves to the commercial bank's Fed account, and the commercial bank would add $1 billion to the corporation's bank account. At the end of the transaction, the commercial bank would have $1 trillion in reserve assets from the central bank, balanced by an increase of $1 billion in bank deposit liabilities to the corporation.