yea for all the claims of ‘i eat meat for protein unlike those vegans/vegetarians who are protein deficient’, meat is just a treat.

Base money includes some of the Government liabilities like bank notes, coins, settlement balances (also known as reserves which are balances held by commercial banks at Central Bank used to settle payments between banks). It does not include Government bonds.

More importantly, it doesn’t include bank loans. Commercial banks create money too, they use leverage to create bank loans in excess of liquid assets they have which creates bank deposits (bank money). This is called endogenous money. And this bank money is special in that it is ‘money’, Government accepts it to settle debts you owe to it (eg. taxes, fees, fines), contracts are also largely enforced in bank money (you cannot buy a house with cash in many countries for instance, you can with bank money).

Another thing, bank money is also freely convertible to base money at par ($1 of bank money = $1 of base money). The Central Bank makes sure that’s the case so there are no run on banks, when you make a transfer from one bank to another, base money is used (aforementioned settlement balances), you also convert bank money to Government’s by withdrawing cash (since that’s a Govt liability). If there is a system wide shortage of settlement balances, the Central Bank must provide it else risk payments system failing at the extreme.

Given that bank money is freely convertible to base money, that bank money is created well in excess of base money (due to leverage), and that the base money is convertible without capital controls to USD (for example), the ‘currency board’ cannot guarantee convertibility to US Dollars in a mechanical sense. The usual claim that currency boards cannot be broken isn’t true.

Raising interest rates is a way to keep people from exchanging base money for foreign currency, acts as a sort of an incentive. This cannot work in the extreme, e.g. Russia in the 90s where Central Bank raised rates to triple digits, paying out billions in Rubles which were convertible to US Dollars.

Of course, this doesn’t apply if your currency floats, in this case any intervention becomes discretionary.

Issue is trade is only a small component of balancing international payments. UAE has no capital controls, so anyone can swap Dirham for Dollar freely, and their Central Bank must defend the rate they set. It’s basically a money laundering haven so…

See

I would expand the third point is even more complicated and it’s not just independent monetary policy but also independent fiscal policy you have to give up. At the extreme, no matter how high the interest rate is, a peg cannot be defended without running out of reserves. Basically you cannot:

1. Provide absolute promise to provide a fixed rate for converting local currency to another. (fixed exchange rates)
2. Provide convertibility in unlimited amounts. (no capital controls)
3. Unconstrained (Gov spending and bank credit creation) creation of domestic money convertible into foreign currency i.e. demand to convert domestic money into foreign currency does not exceed the system’s capacity.

All at once. UAE does so because its reserves are so large attacking the peg is very difficult and usually impractical but mechanically the peg is theoretically breakable, even currency boards like Hong Kong are (they only back base money, not all money). So credibility matters a lot.

Really don’t see how that’ll solve their problem which is that their currency peg is under pressure? Unless China provides their own currency swap arrangement or loan to UAE.

Devaluation must be really scary thing for them considering how long they’ve held their $1=3.67 Dirham parity. Everyone has planned and expected that rate. Abandoning it is much riskier for UAE than some settlement being done in Yuan for the US.

That said, UAE has trillions in Dollar denominated assets in their SWF, just that it’s mostly in illiquid assets seeking higher returns.

I think it’s more about liquidity and credibility than actual “UAE being broke” issue. Credibility also matters, if UAE starts selling assets to maintain peg, it’ll create speculative pressure which will further increase outflows. A currency swap arrangement is generally good market optics.

IMF approves second review of agreement with Argentina and disburses another billion dollars

https://elpais.com/argentina/2026-04-15/el-fmi-aprueba-la-segunda-revision-del-acuerdo-con-argentina-y-desembolsa-otros-1000-millones-de-dolares.html

Basically another capital flight and treat subsidy. Much of which will go into paying existing debt ponzi.

Let’s see how long this can continue before the Peso must collapse.

U.S. House of Companies in Argentina (AmCham). “We will continue to cut public spending to continue lowering taxes because taxes are a theft […] We will take all the pesos off the street until the inflation rate collapses […] We will not give up an iota in monetary policy, we will not give up an iota in continuing to deregulate,” he said. “We’re going to tie ourselves to the ship’s stick, we’re not going to listen to the siren songs.”

1. Tax cut increases pesos in circulation.
2. 30% interest rates increases pesos in circulation, it literally increases the fiscal deficit.
3. They want taxes on workers but not themselves, since otherwise fiscal deficit goes toward infinity as % of revenue. In fact, they want workers to be in debt to private banks so they can pay taxes and other debts.

Both tax cuts for rich and interest payments are wasteful spending going into hoards or leaking into imports.

Really don’t see a way out for Argentina unless they default on all their foreign currency debt and float the Peso, like actually float it, not pretend float since the latter forces Government to accommodate private demand for foreign currency. Then only can they raise socially useful spending.

The Iran war external shock really hurting the Gov’s popularity. Cooking gas has become unaffordable or unavailable for the poor.

Modi is washed, couldn’t get enough from the opposition to vote for his constitution amendment which would’ve reduced representation of opposition states, and allowed more gerrymandering

Yeah it’ll be a very interesting form of capitalism. Corps exist to turn money into more money. Since the state is now a biz, it can’t run deficits/losses anymore. This implies no one will have any money since taxes > spending permanently. This can only be sustainable if profits are generated externally from foreign sector. But this also means not all countries can run profits.

Cortisol spike moment

J street plan is bullshit

Israel doesn’t need aid from the US because they transformed their economy in the 2000s, into exporting services. Netanyahu and others know this. Cutting off some transfers is just a way to to prevent excess appreciation of shekel naturally without Bank of Israel having to buy up excess $.

In other words, where many global south countries struggle to obtain Dollars, Israel has too much of it.

By cutting off only the aid part, Israel can reduce the bad optics of being a parasite all while avoiding being accused of mercantilism.

True, the argument made by neoliberals usually is that when inflation expectations are high, workers demand higher wages which pushes up prices etc (not necessarily wrong). That may be somewhat applicable in an environment where jobs are easy to get and workers have organizing power, but it’s not the case in most countries now, mostly its partial. And they use the expectations to raise interest rates (supposedly to weaken workers).

There’s also difference between price level changes and inflation. The latter is continuous. E.g. oil prices rise by $10, the capitalists pass it as $10 rise in prices. If workers are weak, they can’t demand higher wages and instead take real wage hit. If they have power, they will demand $10 rise in wages to counter the rise in prices, and capitalists raise prices etc. Ofc I am simplifying, capitalists may take partial hit, workers may take partial raises in money wages and one-time wage catch-up may not necessarily create inflation.

Inflation/deflation expectations don’t fuel inflation/deflation. It’s the other way.

Yep look at dated brent

https://www.cnbcafrica.com/2026/european-african-crude-oil-prices-hit-records-on-supply-disruptions-despite-ceasefire

Also, the oil futures market is still in heavy backwardization ie spot prices are much higher than futures prices implying supply constraints and everyone wanting oil now. The markup is due to “convenience yield.”

Edit: and this backwardization doesn’t happen much with financial asset futures ie foreign currencies and bonds (see CIP) , stocks and some commodities like gold and bitcoin. With those, futures>spot because the main cost is financing. You don’t need a stock or a bond NOW (these are electronic entries which can always be transferred and you will almost always find traders for) in the way you need crude oil as a refiner (immediate use value).

I don’t think it’s doomerism to say Israel didn’t like even the idea of a ceasefire. Israelis aren’t just an American puppet, they have autonomy even if limited.

There are positive aspects, Iran fared well and the Government continues to function, they also get foreign currencies from the strait which is nice.

And I believe the US wants to declare “victory” and get the strait opened. I think last year similar dynamic happeend to where Israel continued to attack Lebanon just in a “reduced” manner.

Feels like the war is just postponed to a year or so from now considering Israel didn’t achieve a lot.

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Can states tax the hoards created by military spending? Ofc they can’t (or won’t). :P

Why Tuesday? Stock market manipulation proly

Russia still has ‘Visa’ and ‘Mastercard’ branded cards, they just use local payment rails instead. Even before 2022 this was the case for local transactions albeit less so.

VISA/MC have advantage that you can use them for foreign transactions, it’s widely accepted provided your country isn’t sanctioned. So a hybrid approach like what Russia did between 2014-2022 may be good for Europe. Worst case, US sanctions you and you lose ability to do some foreign currency transactions, but Euro and similar transactions work just fine.

But I know its legally and politically difficult in Europe. Even the CBDC plan listed in the article has banks pissed about losing deposits from their balance sheet to the Central Bank (since Digital Euros are central bank liabilities) and fees.

That’s why

Despite the substantial progress, two major issues remain: ‘holding limits’ and ‘compensation’. Holding limits determine the maximum amount users can keep in a digital euro wallet, while compensation mechanisms concern the fee models for commercial banks that provide digital euro services.

to prevent too much deposit flight, and btw you won’t get paid ECB interest rate with CBDC unlike the banks who hold reserves.

and VISA/MC cards still have two other advantages. i. it’s widely accepted worldwide, you can use it for foreign exchange. ii. chargebacks are possible. The latter can be fixed with locally branded cards (eg Russia has Mir) or I suppose CBDC can be made to support it, but does the EU want to?