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0 sats \ 1 reply \ @028559d218 22 Mar \ parent \ on: Hayek He Ain't econ
Correct me if I'm wrong... but doesn't lower rates mean a faster rate of money (or credit) creation?
That's why when rates are low... it's a 'weaker' dollar. And higher rates are a 'stronger' dollar, everything else being equal?
My understanding of Fiscal Dominance... was that it meant that debt load, rather than Fed Funds, was setting interest rates especially long-term interest rates. It's when the central bank no longer has control over interest rates compared to debt load... the 'fiscal situation' is dominant instead of the 'set' interest rates.
Lower rates bring in less NEW offshore fiat because there's less yield to attract them. Its an equilibrium of diminishing return, not a signal of weakness, since the rates can only be low if the dollar can command it in the first place... like everyone wishes they could get 2% risk free on Bitcoin
Correct the fed doesn't control the long end, but the funds rate on the short end trickles out because its a multiple of cash in the system to bid those rates, and short term bills are effectively cash in moneymarkets etc.
I think the stables are how they get people in other countries included in what is effectively the US money market, even if the foreign government doesn't like it.
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