Exit Liquidity Podcast, @Alto_money Advisooor (posts are my own), Mech Engineer, Macro / Crypto / Defi Nerd
Chicagoland
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Nonsense, the RRP has been sitting at negligible levels since late last summer. It didn’t spell imminent trouble then and it doesn’t now either. It was merely the first milestone on that path. Until you start seeing prominent use of the repo facilities or some stresses in dollar funding in the repo market, there is no imminent danger of a financial panic. Lack of RRP just means that the liquidity cushion from the COVID-era money printing has now been removed.
Bank reserves are currently below where they were during the Silicon Valley bank panic so we have to be at or near the lowest comfortable level of reserves. So even though it is not currently time to panic, we should definitely be on the lookout for further deterioration of liquidity conditions…
I will be watching SOFR-IORB spreads (currently sitting at their highest level since last year), dxy, repo rates, and SRF /FIMA repo usage to keep an eye on the situation.
Giving this one a bump for no reason in particular today…
Here is a chart measuring the amount of reserves in the banking system over time. As you can see it is down to levels not seen since 2020. See that period where it was dropping precipitously? That was the last hiking cycle.
T-Bills falling in anticipation of the Fed hiking is going to suck even more money out of the banking system as the haircuts being applied in the repo market suck liquidity out of the system.
Today’s treasury market turmoil is tomorrow’s banking crisis (not literally tomorrow). One sign that we will have gotten into the danger zone will be Repo facilities getting tapped (which we haven’t seen yet).
However, markets can move quickly and the situation could deteriorate fast. Particularly with the backdrop of extremely high energy prices. When energy costs are high it forces counties and firms alike to liquidate dollar denominated assets to keep the proverbial lights on.
They should just get rid of all the chrome books then…
Breaking: Google will turn off web search for schools that opt out of A.I. for kids.
nytimes.com/2026/11/03/us/go…
Seems to me it started to take off when inflation did so it is hard to disentangle the drop in real wages with the actual productivity…
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Now when your TV is spying on you and sending all your data to external parties you can be taxed for the privilege…
BREAKING: France just voted to tax the internet.
French lawmakers approved a tax of €0.055 (5.5 cents) for every gigabyte of data that companies like Netflix and YouTube send to French users. It’s a tax on the companies, not users directly, but the cost could get passed on to subscribers.
The vote was 11 to 10, with only 35 of 577 lawmakers present. Supporters say it could raise up to €10 billion a year. The French government opposed it, warning it would hit smaller French companies hardest; VLC says it would cost it over €1 million a year.
Readers added context they thought people might want to know
This amendment to France's 2027 budget bill was narrowly adopted 11-10 in the National Assembly (35 voters present) but is not yet law, faces government opposition, and must still clear further Assembly/Senate steps.
assemblee-nationale.fr/dyn/17/comptes…
assemblee-nationale.fr/dyn/17/amendem…
capital.fr/economie-polit…
stephanelarue.com/taxe-au-gigaoc…
There is the delusion that has been collectively foisted upon us by the Fed and its ilk that the economy is something that can be managed and you can just ‘prevent’ any negative consequences. It doesn’t work that way! Whether you acknowledge the consequences or not, they are here. This is why society has devolved so quickly since 2008. We have re-inflated every bubble in an effort to prevent the natural consequences of capital misallocation, and now we have so warped our society that it is unrecognizable from the world of 25 years ago.
The oligarchs are doing the math and realizing they need more exit liquidity than these stupid peasants have to offer so they are gonna have to print money and buy stocks “for the kids”. Meanwhile, they will sell their stocks and buy real assets…
Trump Accounts may soon be expanded even more to anyone under 40yrs old. That would be another 100 million people, on top of the 70 million kids and 3.5mil babies born each year. This according to Brad Gerstner who is the main guy spearheading efforts on this. He also said Elon is 'tip of iceberg' Nice scoop and piece on it from @LydiaMoynihan @nypost
Whatever Jamie says with his mouth is the opposite of what his positioning is.
JPMORGAN CEO JAMIE DIMON SAYS U.S. ECONOMY IS BOOMING
JPMorgan CEO Jamie Dimon says the U.S. economy is booming, supported by strong corporate profits, low unemployment and massive AI infrastructure spending.
Dimon believes AI could eventually have a deflationary effect, despite near-term price pressures.
The key risk: Geopolitical conflicts, persistent inflation and rising interest rates could threaten economic growth.
If your argument could also be retroactively applied to railroads, and the stock market crash of 1929, and the dot com bubble, and the crypto bubble of 2021 then it really isn’t a refutation of the position…
Yeah that’s a no from me. I’ll order the pizza myself before I give these tech clowns any more access to my life than they already have…
Not to go full UNC but I would go back to ordering by phone if it meant we could undo this panopticon bullshit.
At the end of the day. Much of the inflation we have seen has come from a boom in private credit. This is money printing. At then end of the boom comes the bust. That bust will be massively deflationary…unless… in order to limit the fallout the government prints enough money to fill the massive hole that will be left in innocent people’s retirements and pensions and insurance. The fact that printing all that money will then absolve any and all of the bad capital allocators of any accountability for digging these holes is just a side benefit to the elites at the helm. There will be a bailout. Because if they don’t the deflationary bomb will destroy the entire subset of the economy that owns assets. The people that don’t own assets won’t give a shit and will be left worse off than before but the propaganda will make the bailout seem like the only option to prevent apocalypse. The truth is the best thing we could do for society would be to let this bomb go off and cleanse the economy.
The other part of this that I don’t see enough people talking about is that the transmission system simply does not have enough Generation capacity to actually run all these GPUs that everyone is buying… and yet the debt payments are going to need to be made…
We are not building nearly enough generation capacity to be able to run all these allegedly incoming data centers for years to come. Nuclear plants take a decade at a minimum to build out. CT’s take 3 years at least. Solar and wind are intermittent won’t cut it without risking a blackout. The sun isn’t always shining and the wind isn’t always blowing and frankly there is no easily scaled alternative to large hunks of spinning metal providing inertia to the grid.
I am so glad that my pension and insurance funds are all stuffed to the gills with debt that is going to be absolutely impossible to get a return on.
I get it, there are nuances for tech-bros who are deep in the weeds. Everyone has an anecdote about why I’m wrong.
Take a step back and be a commodity-bro who’s seen enough supply/demand cycles. Tokens are a commodity. Currently, the token factories are out-stripping token demand. Pricing is the adjustment factor. Except token factories are mostly fixed-price businesses. They have take-or-pay. They have commitments. They will produce tokens at a loss rather than turn off.
I’m not saying that token demand is slowing. It’s still growing at astronomical rates. I’m saying that token production is now out-pacing demand. The cycle will turn when demand accelerates or token production slows. There’s like half a trillion $ of GPUs waiting to be installed. I don’t think token production slows anytime soon.
Yeah, I get it. Jevon’s and all. It’s great for AI consumers and innovators. But the guys owning token factories are gonna all go bust in the process, and that’s like $2T of capex to date. You cannot even restructure these things and crush the debt. They’re just stranded by new, and more efficient chips. They’re always going to be stranded by new chips. More efficient Models will strand the more expensive ones. It’s a race to the bottom against fixed costs. It’s the most godawful business misallocation I’ve seen in a while. Makes the Chinese look like prudent capital allocators🤣🤣
It’s like having iron rails when the new railroads run on steel. This bankruptcy cycle will be epic…
