There is always a lot of talk about interest rates yet there is something that is very basic overlooked.
In this video I discuss how the money people actually use interest as compared to the economist and central bank models which are not reality. Also we look at the two biggest monetary moves in the last 125 years and how this applies to interest rates.
▶️ 3Speak
I guess this makes more sense to me now. I'm surprised that Capital isn't talked about more in the media. Is the Fed and the media trying to manipulate the narrative?
Summary:
In this episode, Task delves into the historical events surrounding interest rates, focusing on two significant monetary occurrences: the formation of the U.S. Federal Reserve and the Eurodollar system. He explains the purpose behind the establishment of 12 regional Federal Reserve banks and how they were designed to prevent bank runs. Task also discusses the Eurodollar system's origins, particularly Midland Bank's role, and elaborates on the impact of interest rates on attracting or repelling capital. He emphasizes that interest rates are not intended to stimulate the economy but rather influence capital flow.
Detailed Article:
Task begins the episode by outlining a historical perspective on interest rates, starting with the establishment of the U.S. Federal Reserve and the Eurodollar system. He questions the reasoning behind having 12 regional banks of the Federal Reserve instead of 12 branches, highlighting their role in preventing bank runs by attracting capital during financial crises.
The Eurodollar system and Midland Bank's influence during the Great Depression era are discussed next. Task explains how regulatory restrictions on interest rates, like Regulation R or Regulation Q, aimed to curb currency collapses caused by speculation. He delves into how Midland Bank's decision to lend out dollars ignited a capital influx from the U.S. into European banks, leading to the growth of the Eurodollar system.
Task emphasizes that interest rates serve to attract or repel capital, offering insights into how different regions use varying interest rates to influence capital flow. He debunks the notion that interest rates are meant to stimulate the economy, asserting that they impact the movement of capital based on returns. The discussion shifts towards the roles of Federal Reserve banks in controlling commercial paper and setting interest rates to manage capital inflows.
Furthermore, Task accentuates the importance of understanding capital flow and its relationship with interest rates. He challenges conventional economic beliefs by arguing that interest rates do not directly stimulate lending but rather guide capital movement based on returns. Task provides real-world examples, like the impact of interest rates on Tesla's capital influx, to illustrate his points.
Task critiques central bankers and economists for their focus on theoretical models and insufficient consideration of international capital flows. He underscores the fundamental principle that money will gravitate towards the best returns, dictating capital movements. The episode concludes with Task advocating for a deeper understanding of the link between interest rates and capital flow, brushing aside conventional economic notions and emphasizing the critical role of capital movement in financial systems.
In essence, Task's deep dive into historical monetary events and the impact of interest rates provides valuable insights into the complexities of capital flow and challenges traditional economic narratives surrounding interest rates and economic stimulation.
Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.