21 sats \ 0 replies \ @gmd 16 Jun 2022
I'm too dumb to understand this implications of all of this but this sounds really bad...
From Fortune magazine: Another ‘stable’ currency peg is falling, but this time it looks like it might vindicate crypto bulls
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3 sats \ 0 replies \ @faithandcredit 16 Jun 2022
When russia is doing 10% interest rate in a more or less gold back currency and demonstrating power with the military operation in Ukraine, the spoiled west aligned countries with their fake low rates no longer have monopoly and they must raise rates or see the capital flee to russia.
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10 sats \ 1 reply \ @nkmg1c_ventures 16 Jun 2022
I recently started reading about yield curve control (YCC), which is the strategy their central bank has taken. If you google "yield curve control" + "federal reserve" you get articles about Yellen, Powell and previous Fed hotshots all being "interested" in the idea.
The whole idea (not a prof. econ guy, but I am a math guy) seems to be to stop government from defaulting on the debt by controlling the more future-oriented bond rates (10 year bonds), essentially trying to control or "peg" the interest rate to some value. It seems insane, you basically just keep printing money to throw at a problem to keep up appearances.
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0 sats \ 0 replies \ @KingZing 17 Jun 2022
It's not just about defaulting on debt, more about using it to stimulate the economy.
https://www.brookings.edu/blog/up-front/2020/06/05/what-is-yield-curve-control/
This article is quite interesting in explaining how it actually reduced all the bonds they had to buy after implementation (until the current mass sell off)
There's a lot of game theory involved and now the tides are turned, this article is barely two years old and quite amusing everything is different now.
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0 sats \ 1 reply \ @shyfire 17 Jun 2022
Could someone ELI14?
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100 sats \ 0 replies \ @0260378aef 17 Jun 2022
Japan's central bank keeps its government bond (JGB) yields below a ceiling of (I think) 0.25%. It does this buy simply buying up the bonds (using printed yen, basically) when they go too high [*]. That last sentence was a big oversimplification of the CB's behaviour and may be subtly or grossly wrong, I apologise.
And that it is an oversimplification, is seen from this headline: there is still some kind of "free" market for JGBs, and they are showing a big spike in the JGB 10 year yield, well above the 0.25% "ceiling". Whether the CB wakes up tomorrow and says "lol no" and pushes the yield back below the ceiling, I have no idea. But it's always interesting seeing a peg break.
[*] - the basic dynamic of bonds. As their price falls, the effective yield (interest rate) rises, e.g. if the interest rate is 10% at a price of 100, then if the price falls to 99, the interest rate has become ~ 11%.
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0 sats \ 0 replies \ @CheezeGrater 16 Jun 2022
So they decided to stop printing?
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0 sats \ 0 replies \ @tomlaies 16 Jun 2022
Japan central bank and bond yields etc are so uncorrelated from the rest of the world, it's actually fascinating.
Idk yet if we should be worried.
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