Maroon Macro: All They Told You About Money Printing is Wrong

On today's edition of “Boiler Room,” Alfonso Peccatiello is joined by Maroon Macro, global macro hedge fund analyst and author of the "Monetary Mechanics" substack. With a speciality in financial plumbing and economic history, Maroon Macro offers listeners a true masterclass in money.

Walking us through how our monetary system actually works, Maroon covers banking, bank reserves, the limitations of the Federal Reserve, quantitative easing, and the use of collateral.
--

--
Referenced In The Show:

--
Timestamps:
00:00 Introduction
00:51 What Is Money?
05:49 The Limitation of The Federal Reserve
11:26 What Are Banks Doing With Bank Reserves?
12:49 Is QE Inflationary?
17:16 Bank Reserves Effect On Asset Prices
22:17 The Hierarchy of Collateral
--
Disclaimer: Nothing discussed on Boiler Room should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[slamslidestyle]

This guy is great. Alfonzo asks great questions too, great combo…looking forward to seeing part 2! I wonder if this likes Bitcoin or even what he think of Bitcoin on a fundamental level. Thanks blockworks!

[rajeshraut]

Compare the reserve credit at the New York Fed to the reserve credit at the San Francisco Fed. What gets printed in New York stays in New York.

[ServoSambo]

Brilliant! This is literally the most succinct, logical and clear summary of the US monetary system Ive come across on YouTube to date and would be an excellent educational source for undergrad/budding Economists. It clearly explains what both Alfonzo and Jeff have been tying to say for years. Great work.

[alanmrsic]

Precious metals are money and energy is currency right :-)

[mere_cat]

Holy crap this was great! Thanks for the education!

[libertysprings]

QE works by reducing interest rates on real estate which allows people to buy a more expensive house or car than they otherwise could have. This higher loan amount made by the banks is how the actual money/credit gets into the economy. These housing bubbles are the main cause of inflation due to all the high value loans made. Plus even people not buying houses thinks their own house is now worth more and takes out a home equity loan which is more new money creation. That's why the Fed is curry raising the rates to kill excess real estate investment which slows the rate of new money creation as less new loans are made to buy real estate.

[frmcf]

I have a question about pension funds not buying televisions: I get that pension funds don't directly buy televisions, but they might buy equities or corporate debt in a hotel chain, and the hotel chain buys televisions, and bread and coffee etc. Is it fair to say that this is a simplification and that in the real economy some of the money invested by pension funds does contribute to consumer inflation?

[DonRua]

I value Macro Alf’s input. But before I give anybody’s opinion serious consideration I like to “fact check” their credentials.

The fact that he graduated in 2014 and joined ING immediately, without significant prior experience, raises questions about whether he would have been entrusted with such a senior role managing a $20 billion portfolio, especially considering the global prominence of ING.

Additionally, the absence of press releases or public statements from ING regarding his tenure as the Head of Investments and Portfolio Manager of Fixed Income adds to the skepticism. Typically, financial institutions announce significant appointments, especially at leadership levels, to showcase their team's expertise.

It's worth noting that titles like "Head of Investments" can vary in meaning, ie., US mkt, Japan, China, emerging mkt, EU, etc. However, given the magnitude of the portfolio mentioned and the global stature of ING, there might be reasonable skepticism surrounding the clarity and accuracy of Alfonso Peccatiello's professional claims.

[opensky]

Generally a conscise representation of the monetary system just as explained by MMT. The only important function not discussed is that 97% of money, although created through banks, only a part of it is created by loan creation within the bank. The rest is created by public spending. The not taxed surplus stays in private hands as equity. So folks if you want to reduce the public debt please also state which private equity should be reduced.

[nobodynever]

9:18 I would love for someone to calculate how many years of growing hemp it would take for the mint to print 100% of bank reserves into physical currency. Probably 1000 years.

[chrislemieux]

Raoul Pal called bitcoin the most pristine collateral 😂😂

[Rogcljon]

The question I always wonder but not seen answered is are the primary dealers buying treasuries from the treasury in Reserves or "spendable dollars" surely it can't be reserves as that wouldn't allow the government to buy things from the economy, so would be pointless. If this is the case then through a circuitous route the feds treasury buying from primary dealers does lead to inflation just by forcing the primary dealers to buy more treasuries. I'm not going to lie however many times I watch and listen to explanations of the reserve system, of which this was a good start definitely, it just leads to more questions in my mind not less.

[davidlim]

Is this Jeff Snider's younger brother?

[seankennedy]

Lol, this guy's a NERD*. Love it!

* In the best way---deep and detailed knowledge.

[tonya]

What's the purpose of this question? Is it to make the average Joe Blow understand what bank reserves are and how QE creates lots of it? Should Joe Blow care other than the fact that its basis is debt that he and others will eventually pay for? Hopefully you can simplify this a lot more.

[ponzianomanning]

Can equities in hi quality companies be accepted as money or as "Rehypothecated Collateral"?

[bobhope]

As a long-time Jeff Snider stan, this video pleases me. Well done.

[precious]

Taking one step at a time and trying new things help build your confidence to achieve your goals. To attain financial independence, Start investing, as it's the only way to maximize income. I spent over 10yrs working with a company that was a waste of my youthful days. Lately, discovered NFTs and life feels easier

[taccntb]

Money is Ethereum's soon to become deflationary ultra sound money.

[nonyab]

Gold is money. The end. I just saved you 31 minutes