Jim -- first, thank you for taking the time to put down your research and thoughts on paper -- it is valuable.
Up until this part (Part III), I've had no issue with any of the material you have presented. I think you give a good sense of how 'historically' the system used to work (in a stylized bank under the gold system), and how money is created today (by being loaned into existence). This is valuable.
I have a couple of comments that I hope you consider. First, let me preface my comments saying that I am making them from a position of humility (I do not claim to have a comprehensive, yet alone definitive, understanding of money and banking, so under no circumstances am I screaming 'you are wrong' or that 'I could do better'. I very clearly could not). So take my comments, suggestions, and concerns (about what you have written) in that context.
My first observation is on the 'frame of reference' to your narrative. You appear to be writing 'the story of money and banking' from the perspective of 'Mr. Joe Average Citizen' -- explaining to them what their 'deposits' in the bank really mean, 'where' their loans come from, how 'fiat' currency is created, etc. This is great, needed, and useful for pretty much 'everybody'. However, this 'frame of reference' and 'starting point' is not necessarily a good 'frame of reference' for someone wanting to understand 'hot topics' in global macro and finance 'right now'. For example, someone trying to understand global macro issues (such as how bank's use 'wholesale money' or how 'collateral shortages' and 'constrained bank balance sheet capacity' affect lending) might not want to wade through the many pages of stylized discussion and simplified 'basics' to get to 'the answers' you might ultimately provide.
The 'so what' of this particular comment pertains to your proposed 9 part series. Is the 9 part series you are writing going to be 'useful enough' to readers with those kinds of questions? Do you need a different 9 part series telling 'your story' from different starting perspective? For example, when your son or daughter asks 'where do babies come from?", where do you begin your answer? When they are five years old, you might start the story one way, in a particular narrative direction and certain level of detail. However, when they are 15 (and studying for a genetics test), you might pick it up in a very different manner. I am supposing that you have useful insights to add in both of those scenarios (the beginner primer for the 'very young' and a more detailed examination for the moderately advanced or even 'expert') -- you just might need 'more' narratives than what you are currently envisioning (i.e. your 9 part story) to serve all of those different audiences. The fact that you think that 'many experts get QE wrong' is a good argument that both the 'young' and the 'advanced' need 'talking to'. It is unlikely that one narrative 'ring' is going to be 'good enough' to 'rule them all'.
My second comment relates to some of your 'advanced' comments regarding today's 'hot topics'.
In today's article, you state that you believed that QE was effective in (meaningfully) increasing the money supply (because the assets purchased by the Fed were from private individuals). I am no expert (and even if I was, I doubt you would accept 'correction' from me based on that self-claimed 'expertise'). Therefore, I am not saying that 'you are wrong' about this. Instead, what I am saying is that 'you may be wrong here' -- and that you need to do a much better job demonstrating that you are right.
For example, were most of the assets purchased by the Fed actually purchased from private hands (and not from Financial institutions that hold such assets on their own behalf)? Can you show this empirically? Or even if you can, do concepts such as 'the velocity of money' play a role (and perhaps make the practical effect of such QE de-minimus because the private individuals merely sink those funds into savings rather than consumption)?
Or what if you can show that these 'objections' are 'false' -- but the totally effect of such an increase in the domestic money supply is inconsequential in light of the total amount of debt (money supply) being unwound worldwide due to debt repayment (i.e. deleveraging)?
My point here is not to debate you on these points (I am not qualified to do so) - but I do listen to many people smarter than me on these topics and I am aware that some of those people might make those objections (or ones similar to those objections). Therefore, what I am suggesting is that you need to 'go more slowly', 'provide more data and evidence', and or entertain (and dismantle) other points of view more comprehensively than you do than in today's article. Merely claiming that 'experts' that disagree are 'wrong' is not enough. These topics are 'big fish' -- you need stronger rods and test lines if you want to successfully land such creatures.
Thanks for those very thoughtful comments, Martin. I'm aware of some of the issues you raise. For example, I'm aware that some recognized experts would disagree with my exposition. On the other hand, others would agree with me - for example Richard Werner, a renowned monetary economist, Thomas Jordan, the chairman of the Swiss National Bank, and JK Galbraith (deceased). There are many others. You are right that I am aiming this course (book) to non-experts, although my target is not Joe Average but really any educated, interested person who wants to. understand money creation. I accept that my exposition of the Fed's role in creating too much money is not shared by all (although the numbers in my camp are growing, I believe) but I think subsequent sessions, especially Session Six, will throw more light on the Fed's role in inflation as I define it. I take to heart your comment that my analysis may be too cursory to convince an academic who has been trained differently. I haven't figured out how to talk to my audience (as described above) without keeping it basic and brief. Too much detail upfront risks losing them, I fear. Finally, I appreciate your interest and the fact that you continue to consume the content. If you ever want to discuss any specific statement or formulation on the grounds of accuracy or clarity, I would welcome that. Obviously, I believe I can defend anything I have said, else I would not have said it! And I don't ask people to "agree," merely to discuss differences in the spirit of getting to the truth. Again, thanks for reading and commenting, I appreciate it!
I'm not going to talk about deposits not being a means of payment today, but rather point out that the BoE should not be seen as the originator of the theory that banks create "money" when they lend. Because if you look at this letter from 2013, you will see that the FASB had already categorized "deposits" as "cash". Thus, they identify the bills and the deposits, from which it follows that when banks create deposits under a loan agreement, they are also creating cash.
So the BoE has just copied this theory and wrapped it up a bit nicely, without referring to its source. She can do that, but shouldn't get caught out...
which can currently (for unauthorized persons) only be accessed via archive.org, saved on January 26, 2016.
A note: "currency in circulation" is a misleading term, because on the one hand it is the liability position originating from the issuance of banknotes at the central bank, on the other hand (in your case) the banknotes in circulation among the public. It seems appropriate to choose different expressions.
And, related: You do not explain (or maybe I overlooked it) how the banknotes are emerging at the central bank, or which processes are necessary for this. That is a big hole in the explanation.
Hey, finally getting around to this! Thanks for the reference to the FASB letter. I'm probably going to stick with BoE as an authoritative source, but not because I've never thought (or said) the BoE originated the credit creation theory. The credit creation theory was well known to 19th-century economists like H.D MacLeod and Hartley Withers, as well as Alfred Marshall and Knut Wicksell (though I've not read the last two). As a long-time financial practitioner, I believe the BoE, along with Richard Werner, were among the first to make this information accessible to large numbers of us who were so steeped in Samuelson So, I feel on solid ground to use both the old guys and the new guys as authorities. (Also, I am writing to a lay crowd, so with all due respect to professional accountants, I want to avoid things like "FASB.") As to "currency in circulation," as defined by the Fed, it consists only of the paper and coins being exchanged out in the economy, that is, outside the banking system. Under a gold standard, I believe the term "currency in circulation" would refer to banknotes as well as gold circulating outside the banking system. My understanding is that if it is exchanged hand-to-hand, it is currency in circulation. I don't see a problem if paper currency is a claim in one regime and final payment in another. (Personally, I think one reason we accepted the transition from banknotes to empty paper willingly is that they look and feel similar, and most people just dont understand!) I'm very aware of the distinction between banknotes, which are a claim on standard money (and are no longer in existence anywhere, I believe) and our present fiat "currency in circulation," which itself is standard money, i.e. full and final payment. As to the "emergence of banknotes," I believe they were originally issued by a individual banks, not a central bank. I believe the BoE Act (1844?) reserved that right only to the BoE. So a banknote does not necessarily have to come from a central bank, but it certainly could. I assume the central bank would issue banknotes redeemable on itself to any smaller bank that gave it gold. So maybe I don't know what you mean by a hole in the explanation. Cheers Jim
Of course -- and thanks for taking my comments in the positive spirit in which they were intended.
With regard to the narrative, maybe consider making a couple of different educational 'books' - i.e. a series of books where any given book 'picks up the problem' from a slightly different angle. Perhaps starting with a 'primer' on the rise of banking, different types of money, how lending occurs, etc (which is what you've been doing in chapters 1-3 so far) -- just don't get into the more intermediate to complex issues in that volume. Use book 1 to 'merely' prove your point on Samuelson et al -- that banking is credit creation and that the other 'common' understandings of what banking is just don't fit today (or even in the past, even though it is 'understandable' why society has gone down these routes of explanation). This alone would be a 'memorable' read - and something even 'the knowledgable' and 'experts' could get something out of (because it addresses the common 'creation myths' of banking we have all been taught for so long'). In short, keep book 1 focused on 'the basics'.
Then have a couple of 'intermediate' modules on some of the more modern 'innovations' we see used today: wholesale money (what is it, how big is it, how it 'helps' the system described in your primer), off-shore dollar 'creation' (the whole 'Eurodollar experience' broadly defined), securitization and hypothecation and bank balance sheet 'engineering' (through various swaps, insurances, etc.). All of these topics are big, scary, and hairy - and exceedingly relevant to understanding banking in the current century -- and probably almost as 'unknown' or 'poorly understood' to most 'educated, interested people' as 'banking', 'money', and 'lending' themselves. This is especially true since most 'banks' don't really 'do (traditional) banking' anymore and it can help explain why 'everybody' is a finance company nowadays.
Finally, I think there is the 'expert' debate level topics (the effectiveness / irrelevance of central banks to today's money, the effectiveness of tools like QE, the rise of any alternative monetary system (like BRICS), etc. It's hard to debate whether or not a new 'non-dollar-denominated' reserve currency system can arise until you understand all the basic and intermediate level functions such a 'system' would have to address.
Clearly, this line of approach (and writing) would keep you continuously employed for the next 50 years, but perhaps there is a way to approach it -- especially if you are 'publishing' online. Your work doesn't have to be a 'Will Durant' style of history from the Stone-Age to today, all published, polished, and footnoted. Perhaps sketching out the broader outline in concept (i.e. defining the boundaries of what you would want to cover, much like how you described your future 9 chapters) is sufficient, provided you 'dropped' articles here and there against that outline (as you find time and interest to publish). In short, 'think bigger and longer' -- but work 'in sections'. Of course, that is 'just a thought' and suggestion.
As for the intermediate and advanced level concepts themselves, I recognize (and like) the contributors you mention (Richard Werner, etc). I'd suggest that you look into and consider at least one more --- Jeff Snider (Eurodollar University) -- who has done a lot of writing and thinking on the topic. It is coming at the topic somewhat orthogonal to you (and to Richard), but he provides information and material that is in some ways supportive, in some ways differing, and very well-supported with data (which appears to be both valid and relevant). Something to check out, I'd suggest.
I am but a 'poor student' of the subject, but if I were to summarize the points of Snider's work that I found most interesting to your topic, I'd paraphrase it as follows:
1) the banking (and Central Banking) system from the end of WW2 (Bretton Woods) started to break down ca 1960 (with the start of the London Gold Pool). This breakdown got worse (for a variety of important reasons which he covers) until it collapsed entirely in 1971.
2) Monetary policy post 1971 'did things' (and money, banking, the economy, and people suffered as a result) as you describe --- and since we have a record of the actions taken (FOMC pronouncements, etc) and since we saw the results (price rises and monetary inflation), we can tell 'the story' of who did what / what happened based on all that. However, at the same time, Snider contends that there was another very significant factor at play (the shadow banking system) that we could not see (because we didn't then and don't now have the metrics or tools to observe what is happening there). In essence, this 'shadow banking' system is coincident with, but only marginally tied to, the observable system (like 'dark matter' or 'dark energy' or 'black holes' in cosmology).
3) This off-shore monetary 'money' was/is largely unregulated (since it is was built extra-nationally on purpose to avoid or get around such regulation) and became an integral part of the wholesale bank money (repo) market that increasingly came to dominate the global banking system starting in the mid 1980's. Technology (telecommunications and computers, the spread of expertise, the increasing 'globalization' of trading to more unregulated jurisdictions, the use of legal 'innovations' (e.g. special purpose vehicles), etc fed the unregulated and practically unconstrained monetary system 'growth'.
4) New 'innovations' (e.g. securitization, various 'swaps', ever more complex modeling of risk and inferred pricing of illiquid 'assets', hypothecation) make the monetary system (i.e. domestic and international growth) grow further. He has charts and info from the BIS that show that the annual rate of growth in worldwide dollar denominated lending was 17% in 2000 and 34% in 2007. His argument here is that money supply 'grew' (in an unregulated, free-market kind of way) exponentially from 1990-2007 (which accounts for the massive increase in global economic activity, prosperity, asset-values and the so-called 'Great Moderation').
5) However, this all collapsed post 2007-2008, and that since that time the world has been in a global dollar collapse of the monetary supply (reflected in the permanently lowered global economic growth rates, rising trade weighted dollar value, etc) particularly outside of the domestic US economy.
6) Seen in this light, his argument would be that QE (even if effective) was insignificant in terms of 'reflating' the great deflation occurring globally in terms of US dollar denominated money supply. On this basis, the obscenity of ever increasing US government debts is 'washed out and overwhelmed' by the 'bottomless pit' of demand for pristine collateral (US government bills) to support global lending. In essence, the current monetary system is broken not just domestically but even more so internationally, and there is 'no solution' on the horizon.
Once again, perhaps I am doing Mr Snider an injustice in explanation -- but I can see lots of places where it fits with what you are saying (and builds on it in other areas). My interest in all this is one of intellectual curiosity -- I want to know how it all fits together --- so I make it a point to listen to as many credible commentators as I can, so I am enjoying what you are producing and thanks.
Jim -- first, thank you for taking the time to put down your research and thoughts on paper -- it is valuable.
Up until this part (Part III), I've had no issue with any of the material you have presented. I think you give a good sense of how 'historically' the system used to work (in a stylized bank under the gold system), and how money is created today (by being loaned into existence). This is valuable.
I have a couple of comments that I hope you consider. First, let me preface my comments saying that I am making them from a position of humility (I do not claim to have a comprehensive, yet alone definitive, understanding of money and banking, so under no circumstances am I screaming 'you are wrong' or that 'I could do better'. I very clearly could not). So take my comments, suggestions, and concerns (about what you have written) in that context.
My first observation is on the 'frame of reference' to your narrative. You appear to be writing 'the story of money and banking' from the perspective of 'Mr. Joe Average Citizen' -- explaining to them what their 'deposits' in the bank really mean, 'where' their loans come from, how 'fiat' currency is created, etc. This is great, needed, and useful for pretty much 'everybody'. However, this 'frame of reference' and 'starting point' is not necessarily a good 'frame of reference' for someone wanting to understand 'hot topics' in global macro and finance 'right now'. For example, someone trying to understand global macro issues (such as how bank's use 'wholesale money' or how 'collateral shortages' and 'constrained bank balance sheet capacity' affect lending) might not want to wade through the many pages of stylized discussion and simplified 'basics' to get to 'the answers' you might ultimately provide.
The 'so what' of this particular comment pertains to your proposed 9 part series. Is the 9 part series you are writing going to be 'useful enough' to readers with those kinds of questions? Do you need a different 9 part series telling 'your story' from different starting perspective? For example, when your son or daughter asks 'where do babies come from?", where do you begin your answer? When they are five years old, you might start the story one way, in a particular narrative direction and certain level of detail. However, when they are 15 (and studying for a genetics test), you might pick it up in a very different manner. I am supposing that you have useful insights to add in both of those scenarios (the beginner primer for the 'very young' and a more detailed examination for the moderately advanced or even 'expert') -- you just might need 'more' narratives than what you are currently envisioning (i.e. your 9 part story) to serve all of those different audiences. The fact that you think that 'many experts get QE wrong' is a good argument that both the 'young' and the 'advanced' need 'talking to'. It is unlikely that one narrative 'ring' is going to be 'good enough' to 'rule them all'.
My second comment relates to some of your 'advanced' comments regarding today's 'hot topics'.
In today's article, you state that you believed that QE was effective in (meaningfully) increasing the money supply (because the assets purchased by the Fed were from private individuals). I am no expert (and even if I was, I doubt you would accept 'correction' from me based on that self-claimed 'expertise'). Therefore, I am not saying that 'you are wrong' about this. Instead, what I am saying is that 'you may be wrong here' -- and that you need to do a much better job demonstrating that you are right.
For example, were most of the assets purchased by the Fed actually purchased from private hands (and not from Financial institutions that hold such assets on their own behalf)? Can you show this empirically? Or even if you can, do concepts such as 'the velocity of money' play a role (and perhaps make the practical effect of such QE de-minimus because the private individuals merely sink those funds into savings rather than consumption)?
Or what if you can show that these 'objections' are 'false' -- but the totally effect of such an increase in the domestic money supply is inconsequential in light of the total amount of debt (money supply) being unwound worldwide due to debt repayment (i.e. deleveraging)?
My point here is not to debate you on these points (I am not qualified to do so) - but I do listen to many people smarter than me on these topics and I am aware that some of those people might make those objections (or ones similar to those objections). Therefore, what I am suggesting is that you need to 'go more slowly', 'provide more data and evidence', and or entertain (and dismantle) other points of view more comprehensively than you do than in today's article. Merely claiming that 'experts' that disagree are 'wrong' is not enough. These topics are 'big fish' -- you need stronger rods and test lines if you want to successfully land such creatures.
Best regards
Thanks for those very thoughtful comments, Martin. I'm aware of some of the issues you raise. For example, I'm aware that some recognized experts would disagree with my exposition. On the other hand, others would agree with me - for example Richard Werner, a renowned monetary economist, Thomas Jordan, the chairman of the Swiss National Bank, and JK Galbraith (deceased). There are many others. You are right that I am aiming this course (book) to non-experts, although my target is not Joe Average but really any educated, interested person who wants to. understand money creation. I accept that my exposition of the Fed's role in creating too much money is not shared by all (although the numbers in my camp are growing, I believe) but I think subsequent sessions, especially Session Six, will throw more light on the Fed's role in inflation as I define it. I take to heart your comment that my analysis may be too cursory to convince an academic who has been trained differently. I haven't figured out how to talk to my audience (as described above) without keeping it basic and brief. Too much detail upfront risks losing them, I fear. Finally, I appreciate your interest and the fact that you continue to consume the content. If you ever want to discuss any specific statement or formulation on the grounds of accuracy or clarity, I would welcome that. Obviously, I believe I can defend anything I have said, else I would not have said it! And I don't ask people to "agree," merely to discuss differences in the spirit of getting to the truth. Again, thanks for reading and commenting, I appreciate it!
Hi Jim,
I'm not going to talk about deposits not being a means of payment today, but rather point out that the BoE should not be seen as the originator of the theory that banks create "money" when they lend. Because if you look at this letter from 2013, you will see that the FASB had already categorized "deposits" as "cash". Thus, they identify the bills and the deposits, from which it follows that when banks create deposits under a loan agreement, they are also creating cash.
http://www.iicpa.com/publications/Open%20letter%20accounting%20perversion.pdf
So the BoE has just copied this theory and wrapped it up a bit nicely, without referring to its source. She can do that, but shouldn't get caught out...
The source quoted in the letter is:
https://law.resource.org/pub/us/code/bean/fasb.html/fasb.305.2011.html
which can currently (for unauthorized persons) only be accessed via archive.org, saved on January 26, 2016.
A note: "currency in circulation" is a misleading term, because on the one hand it is the liability position originating from the issuance of banknotes at the central bank, on the other hand (in your case) the banknotes in circulation among the public. It seems appropriate to choose different expressions.
And, related: You do not explain (or maybe I overlooked it) how the banknotes are emerging at the central bank, or which processes are necessary for this. That is a big hole in the explanation.
Best regards
Hey, finally getting around to this! Thanks for the reference to the FASB letter. I'm probably going to stick with BoE as an authoritative source, but not because I've never thought (or said) the BoE originated the credit creation theory. The credit creation theory was well known to 19th-century economists like H.D MacLeod and Hartley Withers, as well as Alfred Marshall and Knut Wicksell (though I've not read the last two). As a long-time financial practitioner, I believe the BoE, along with Richard Werner, were among the first to make this information accessible to large numbers of us who were so steeped in Samuelson So, I feel on solid ground to use both the old guys and the new guys as authorities. (Also, I am writing to a lay crowd, so with all due respect to professional accountants, I want to avoid things like "FASB.") As to "currency in circulation," as defined by the Fed, it consists only of the paper and coins being exchanged out in the economy, that is, outside the banking system. Under a gold standard, I believe the term "currency in circulation" would refer to banknotes as well as gold circulating outside the banking system. My understanding is that if it is exchanged hand-to-hand, it is currency in circulation. I don't see a problem if paper currency is a claim in one regime and final payment in another. (Personally, I think one reason we accepted the transition from banknotes to empty paper willingly is that they look and feel similar, and most people just dont understand!) I'm very aware of the distinction between banknotes, which are a claim on standard money (and are no longer in existence anywhere, I believe) and our present fiat "currency in circulation," which itself is standard money, i.e. full and final payment. As to the "emergence of banknotes," I believe they were originally issued by a individual banks, not a central bank. I believe the BoE Act (1844?) reserved that right only to the BoE. So a banknote does not necessarily have to come from a central bank, but it certainly could. I assume the central bank would issue banknotes redeemable on itself to any smaller bank that gave it gold. So maybe I don't know what you mean by a hole in the explanation. Cheers Jim
Of course -- and thanks for taking my comments in the positive spirit in which they were intended.
With regard to the narrative, maybe consider making a couple of different educational 'books' - i.e. a series of books where any given book 'picks up the problem' from a slightly different angle. Perhaps starting with a 'primer' on the rise of banking, different types of money, how lending occurs, etc (which is what you've been doing in chapters 1-3 so far) -- just don't get into the more intermediate to complex issues in that volume. Use book 1 to 'merely' prove your point on Samuelson et al -- that banking is credit creation and that the other 'common' understandings of what banking is just don't fit today (or even in the past, even though it is 'understandable' why society has gone down these routes of explanation). This alone would be a 'memorable' read - and something even 'the knowledgable' and 'experts' could get something out of (because it addresses the common 'creation myths' of banking we have all been taught for so long'). In short, keep book 1 focused on 'the basics'.
Then have a couple of 'intermediate' modules on some of the more modern 'innovations' we see used today: wholesale money (what is it, how big is it, how it 'helps' the system described in your primer), off-shore dollar 'creation' (the whole 'Eurodollar experience' broadly defined), securitization and hypothecation and bank balance sheet 'engineering' (through various swaps, insurances, etc.). All of these topics are big, scary, and hairy - and exceedingly relevant to understanding banking in the current century -- and probably almost as 'unknown' or 'poorly understood' to most 'educated, interested people' as 'banking', 'money', and 'lending' themselves. This is especially true since most 'banks' don't really 'do (traditional) banking' anymore and it can help explain why 'everybody' is a finance company nowadays.
Finally, I think there is the 'expert' debate level topics (the effectiveness / irrelevance of central banks to today's money, the effectiveness of tools like QE, the rise of any alternative monetary system (like BRICS), etc. It's hard to debate whether or not a new 'non-dollar-denominated' reserve currency system can arise until you understand all the basic and intermediate level functions such a 'system' would have to address.
Clearly, this line of approach (and writing) would keep you continuously employed for the next 50 years, but perhaps there is a way to approach it -- especially if you are 'publishing' online. Your work doesn't have to be a 'Will Durant' style of history from the Stone-Age to today, all published, polished, and footnoted. Perhaps sketching out the broader outline in concept (i.e. defining the boundaries of what you would want to cover, much like how you described your future 9 chapters) is sufficient, provided you 'dropped' articles here and there against that outline (as you find time and interest to publish). In short, 'think bigger and longer' -- but work 'in sections'. Of course, that is 'just a thought' and suggestion.
As for the intermediate and advanced level concepts themselves, I recognize (and like) the contributors you mention (Richard Werner, etc). I'd suggest that you look into and consider at least one more --- Jeff Snider (Eurodollar University) -- who has done a lot of writing and thinking on the topic. It is coming at the topic somewhat orthogonal to you (and to Richard), but he provides information and material that is in some ways supportive, in some ways differing, and very well-supported with data (which appears to be both valid and relevant). Something to check out, I'd suggest.
I am but a 'poor student' of the subject, but if I were to summarize the points of Snider's work that I found most interesting to your topic, I'd paraphrase it as follows:
1) the banking (and Central Banking) system from the end of WW2 (Bretton Woods) started to break down ca 1960 (with the start of the London Gold Pool). This breakdown got worse (for a variety of important reasons which he covers) until it collapsed entirely in 1971.
2) Monetary policy post 1971 'did things' (and money, banking, the economy, and people suffered as a result) as you describe --- and since we have a record of the actions taken (FOMC pronouncements, etc) and since we saw the results (price rises and monetary inflation), we can tell 'the story' of who did what / what happened based on all that. However, at the same time, Snider contends that there was another very significant factor at play (the shadow banking system) that we could not see (because we didn't then and don't now have the metrics or tools to observe what is happening there). In essence, this 'shadow banking' system is coincident with, but only marginally tied to, the observable system (like 'dark matter' or 'dark energy' or 'black holes' in cosmology).
3) This off-shore monetary 'money' was/is largely unregulated (since it is was built extra-nationally on purpose to avoid or get around such regulation) and became an integral part of the wholesale bank money (repo) market that increasingly came to dominate the global banking system starting in the mid 1980's. Technology (telecommunications and computers, the spread of expertise, the increasing 'globalization' of trading to more unregulated jurisdictions, the use of legal 'innovations' (e.g. special purpose vehicles), etc fed the unregulated and practically unconstrained monetary system 'growth'.
4) New 'innovations' (e.g. securitization, various 'swaps', ever more complex modeling of risk and inferred pricing of illiquid 'assets', hypothecation) make the monetary system (i.e. domestic and international growth) grow further. He has charts and info from the BIS that show that the annual rate of growth in worldwide dollar denominated lending was 17% in 2000 and 34% in 2007. His argument here is that money supply 'grew' (in an unregulated, free-market kind of way) exponentially from 1990-2007 (which accounts for the massive increase in global economic activity, prosperity, asset-values and the so-called 'Great Moderation').
5) However, this all collapsed post 2007-2008, and that since that time the world has been in a global dollar collapse of the monetary supply (reflected in the permanently lowered global economic growth rates, rising trade weighted dollar value, etc) particularly outside of the domestic US economy.
6) Seen in this light, his argument would be that QE (even if effective) was insignificant in terms of 'reflating' the great deflation occurring globally in terms of US dollar denominated money supply. On this basis, the obscenity of ever increasing US government debts is 'washed out and overwhelmed' by the 'bottomless pit' of demand for pristine collateral (US government bills) to support global lending. In essence, the current monetary system is broken not just domestically but even more so internationally, and there is 'no solution' on the horizon.
Once again, perhaps I am doing Mr Snider an injustice in explanation -- but I can see lots of places where it fits with what you are saying (and builds on it in other areas). My interest in all this is one of intellectual curiosity -- I want to know how it all fits together --- so I make it a point to listen to as many credible commentators as I can, so I am enjoying what you are producing and thanks.
I'll check out Jeff Snider of Eurodollar University. We can only eat this elephant one bite at a time! :)