Respect o7

Ayandeh had attracted deposits from millions of ordinary Iranians by offering unusually high interest rates, creating what one Iranian oversight official allegedly described as a “Ponzi scheme.”

I find it interesting why such a commercial bank was allowed to operate by the regulators. The WSJ article says it was giving bad loans to cronies, so that was definitely the government’s fault. But the bank’s collapse alone doesn’t explain why there was a run out of the rial. It’s easy to blame the collapse of the bank for the collapse of the rial, but I think it’s mostly mainstream economic propaganda. Also, backstopping is literally what all the Western central banks and treasuries did in 2008 and again in 2023, because the banks gave too many loans or held assets which were illiquid, with no inflation, in fact deflation as demand collapsed in 2008. So clearly, it’s not as simple as backstopping deposits.

I think it could be said that the dual exchange rate system where the central bank offered preferential rates to certain sectors, and rent seekers too, made it much worse, since the official rate was much more rigid, undervalued because the central bank used reserves to maintain it, certain connected people may have used it to run to dollars while the state lost reserves. When it ran out, a massive devaluation was inevitable.

Also, he doesn’t talk about the mechanics of how he created a dollar shortage. Did they try going after foreign banks Iran worked with, like in Iraq? I think the government is at least partly to blame, but this wouldn’t have happened if Iran weren’t sanctioned.

The irony is it’s this guy

https://en.wikipedia.org/wiki/Werner_Goldberg

Yea that definitely worked, antisemitism is on the downturn.

Girl, cut it in two.

When landlord pays mortgage from the rent they receive their liability goes down (Mortgage Account), net worth goes up.

When tenant pays rent, it’s simply expensed, their net worth goes down from before payment assuming other things are same.

Ok, so will they get the home if they stay there for 15-30 years? They pay off your mortgage while you gain a real asset at the end.

Richard Hanania be like

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True, my view is that if they are forcing me to save I would rather save in something reliable and gamble with whatever remains from my actual salary.

But I understand some people won’t have much remaining savings. Nothing against anyone either way.

Cities are financially constrained (unlike the Feds) so if the city wants to fund something useful for the public (like free bus), they have to issue bonds if in deficit, they are actually borrowing money.

Of course, taxing the rich is always preferable as it reduces interest payments for the financially constrained city which may be forced to cut spending if interest payments become too much. But even borrowing by issuing bonds can be a solution (it’s better mobilization of rich peoples’ hoards) if higher taxes on hoarders isn’t possible (due to political situation) since tax revenues tend to go up over time depending on economic activity (because of Federal Govt deficits and bank credit creation) and inflation so the debt service becomes lower. All of this depends on the interest rate. Though taxing the rich is always better looking at it from city’s perspective, the rich peoples’ hoards are better used by the city/state Government (except for the police and all).

I was reading this book yesterday and found something new, Chapter 23 by Michael Hudson, where Canadian provinces went so far as to borrow in foreign currencies with lower interest rates but with exchange rate risk and ended up paying 25% rates effectively.

I don’t consider Treasuries to be a loan to the Government, nor does it fund the Government in any meaningful sense, interest on it is free money offered by the Government to the holders. It’s interest bearing cash, no one has any qualms holding currency or working for currency (even though that too is Government debt, one which loses more purchasing power over time). Think of sovereign bonds as interest bearing money instead.

If you have option to put it in treasuries or money market funds, do that. so many countries have these forced savings schemes to funnel workers’ savings into capital gains for capitalists.

He was un-gayed

He has been doing this regularly. Most countries earn their source of foreign currency in Dollars, so even if China is letting exchange rate appreciate, these countries will be strangled and have to pay more to get same goods from China. So, they’ll work harder, try to export more to the U.S.

It’s good that he is talking about capital losses though, with dumping Treasuries or Dollar. So, there’s no dumping, only slowly going off it, even by his logic.

Despite all the claims, I believe most of these countries are buying up gold as a speculative asset, they buy it using Dollars which they earn, with the option of dumping it on others (preferably foreign speculators) for more Dollars. I don’t think there is a very deep market for Gold outside the Dollar one.

It can also be said with more certainty that imports are a benefit if the country has a full employment policy, which the US does not.

It gets treats from China well in excess of what it gives to China and rest of the world, that the US de-industrialized itself in doing so is a political choice.

Without a full employment policy, loss of exports for the exporting country means

1. It will lose employment, capitalists may not invest with lower demand.

2. A balance of payments squeeze (basically the amount of resources a country can command abroad) will occur, since many exporting countries can’t get more than they give.

With a full employment policy, (1) wouldn’t occur, since the state will provide employment and invest as needed. (2) however would be a constraint which is part of the reason why many exporting countries, particularly smaller ones can’t decouple from the US.

For the importing country, imports can displace local production within a market economy. However, it doesn’t mean the state can’t counter it. After all, imports basically mean China is giving the US stuff for free while taking its own electronic entries.

If US wants, it can continue to produce cars, if the quality is as good as Chinese it can set prices to match Chinese ones. If its worse, it can sell the cars at a discount over Chinese ones. The state can set prices this way to keep its industry, the industry may run losses in money terms, but it gives the country self-sufficiency and employment. The US by allowing imports without a full employment policy basically crushed worker bargaining.

your brain is training with new data