a question

[loosecannon]

not that I am aware of

Primary dealer - Wikipedia, the free encyclopedia

A primary dealer is a bank or securities broker-dealer that may trade directly with the Federal Reserve System of the United States ("the Fed").[1] Such firms are required to make bids or offers when the Fed conducts open market operations, provide information to the Fed's open market trading desk, and to participate actively in U.S. Treasury securities auctions.[2] They consult with both the U.S. Treasury and the Fed about funding the budget deficit and implementing monetary policy. Many former employees of primary dealers work at the Treasury, because of their expertise in the government debt markets, though the Fed avoids a similar revolving door policy.[3][4]

Between them, these dealers purchase the vast majority of the U.S. Treasury securities (T-bills, T-notes, and T-bonds) sold at auction, and resell them to the public. Their activities extend well beyond the Treasury market, for example, according to the Wall Street Journal Europe (2/9/06 p. 20), all of the top ten dealers in the foreign exchange market are also primary dealers, and between them account for almost 73% of forex trading volume. Arguably, this group's members are the most influential and powerful non-governmental institutions in world financial markets. Group membership changes slowly, with the current list available from the New York Fed.[1]

The primary dealers form a worldwide network that distributes new U.S. government debt. For example, Daiwa Securities and Mizuho Securities distribute the debt to Japanese buyers. BNP Paribas, Barclays, Deutsche Bank, and RBS Greenwich Capital (a division of the Royal Bank of Scotland) distribute the debt to European buyers. Goldman Sachs, and Citigroup account for many American buyers. Nevertheless, most of these firms compete internationally and in all major financial centers.

In response to the subprime mortgage crisis and to the collapse of Bear Stearns, on March 19, 2008, the Federal Reserve set up the Primary Dealers Credit Facility (PDCF), whereby primary dealers can borrow at the Fed's discount window using several forms of collateral including mortgage backed loans.[5]

but there may be folks other than primary dealers who can buy them more directly. Other banks maybe.

 

[loosecannon]

the antagon system is a complete package and i'd propose it as a policy rather than a stimulus. financing would come by way of the increase in job market demand by cutting back on entitlements with a cap there. i'd charge $ for citizenship and visas for those looking to participate in the hot job market (~$5k), then capture the demand by tying the subsidy to legally employed workers. i'd limit the subsidy to hourly workers coercing a better ratio of management to productive employees, while likely stimulating hiring of non-hourly employees, notwithstanding. i would freeze the prevailing wage and minimum wage for over a decade to suppress inflation in labor costs with the aim of pushing the demand into growth rather than into higher labor rates. i would redress union laws to make them more likely to compete with one another for (shorter) contracts, and with the job market at large. their legal protections would have to be corroded pursuant to the theme of getting more people to work rather than creating a worker elite.

this is the best solution i can think of. it walks away from capitalism's dependency on many progressive entitlements, particularly for able-bodied 16-65s, but not without recognizing their value in specific cases, and while maintaining a mechanism to recycle cash through the sweet spot in the economy.

This makes a lot more sense than our current system of unemployment and tax breaks to stimulate investment etc. For one it is all targeted and it effects demend creation from the start.

Full employment is the antidote to recessions.

And swelling the employment ranks from the bottom while discouraging illegal hiring makes us more competitive in industrial fields.

All of this is also an antidote to offshoring industries.

But it is illegal under NAFTA, CAFTA and WTO rules. And other nations would pitch a fit because the IMF demands that small nations do not subsidize labor in this way. It reeks of dumping.

But I like it cuz I favor protectionism that isn't in the form of tariffs. And I like the mercantilist aspects of tight management over trade deficits.

Globalists on the other hand might have mixed feelings, and other nations might engage in a kind of labor subsidy race. Who knows where that would lead.

Hopefully away from dreaded globalization and back toward nationalism.

Politically it sounds like a perfect tool to manipulate the electorate. Almost as good as controlling their healthcare, unemployment bennies and food stamps.

I feel like Paulie, I can't believe I am discussing this...

 

[antagon]

i say bring on the subsidy race. we've got a huge advantage, because of our wealth and our capacity to return on a $2-3 subsidy is not matched for efficiency over the volume of man-hours our economy puts out.

i don't know the implications to trade agreements, but argue that it is far from dumping in that it retains profitability for manufacturers. the effect on prices may be marginal in fact. the sourcing of labor ought to be quite different.

i say play stupid in leadership and and bullshit dissenters like 'these are the challenges which leadership in our age must rise to addressing social welfare at the impetus of social adhesion, rather than casting a safety net for the fallen.' we'd be right; they'd be wishing they thought of it or could afford it.

 

[antagon]

what about treasury direct?

TreasuryDirect®

You can buy Treasury securities using one convenient web–based account which is part of an application we call TreasuryDirect. TreasuryDirect is our primary retail system for selling our securities. This system allows us to establish direct relationships with you as an investor, enabling you to do business with us electronically using the Internet and conduct transactions without personal assistance from us.

In TreasuryDirect, you can purchase and hold Treasury bills, notes, bonds and inflation-protected securities (TIPS) as well as savings bonds, and manage your holdings online in a secure environment.

Our long-term goal is to consolidate all retail sales of Treasury securities in TreasuryDirect. With this consolidation, we'll realize savings in administrative costs and be able to enhance our customer service.

TreasuryDirect

 

[loosecannon]

i say bring on the subsidy race. we've got a huge advantage, because of our wealth and our capacity to return on a $2-3 subsidy is not matched for efficiency over the volume of man-hours our economy puts out.

i don't know the implications to trade agreements, but argue that it is far from dumping in that it retains profitability for manufacturers. the effect on prices may be marginal in fact. the sourcing of labor ought to be quite different.

i say play stupid in leadership and and bullshit dissenters like 'these are the challenges which leadership in our age must rise to addressing social welfare at the impetus of social adhesion, rather than casting a safety net for the fallen.' we'd be right; they'd be wishing they thought of it or could afford it.

it is a great idea but flatly at odds with our WTO treaties, globalization, NAFTA, CAFTA and our long promoted IMF policies.

I am with you, but I also have no idea what could happen if the whole world engaged in a race to subsidize wages.

It reminds me of the concessions that cities make to sports franchises to win their residence. Those are almost always horrible deals for the cities.

 

[loosecannon]

what about treasury direct?

TreasuryDirect®

You can buy Treasury securities using one convenient web–based account which is part of an application we call TreasuryDirect. TreasuryDirect is our primary retail system for selling our securities. This system allows us to establish direct relationships with you as an investor, enabling you to do business with us electronically using the Internet and conduct transactions without personal assistance from us.

In TreasuryDirect, you can purchase and hold Treasury bills, notes, bonds and inflation-protected securities (TIPS) as well as savings bonds, and manage your holdings online in a secure environment.

Our long-term goal is to consolidate all retail sales of Treasury securities in TreasuryDirect. With this consolidation, we'll realize savings in administrative costs and be able to enhance our customer service.

TreasuryDirect

There are government savings bonds which can surely be purchased directly from the treasury or the fed. I dunno what products treasury direct offers.

I do know that the vast majority of t bills etc are purchased on the secondary market thru primary dealers.

Why would anybody buy from a secondary distributor if they could buy direct?

 

[editec]

You want to get money into this economy?

Eliminate the middle man banks who provide nothing for the interest they're charging.

Let the American people borrow directly from the American people by TRULY making the FEDERAL RESERVE a FEDERAL RESERVE.

Of course none of this will truly help UNTIL we do something about the deindustrialization of this nation that is happening becuase of our TRADE policies.

Right now when you put money into the hands of the consumers, much of goes off shore since the stuff they MUST PURCHASE is made in foreign lands.

It took a long time for this economy to brew, and its going to take a long time if we hope to correct those mistakes we've been making for our entire lifetimes.

 

[antagon]

i say bring on the subsidy race. we've got a huge advantage, because of our wealth and our capacity to return on a $2-3 subsidy is not matched for efficiency over the volume of man-hours our economy puts out.

i don't know the implications to trade agreements, but argue that it is far from dumping in that it retains profitability for manufacturers. the effect on prices may be marginal in fact. the sourcing of labor ought to be quite different.

i say play stupid in leadership and and bullshit dissenters like 'these are the challenges which leadership in our age must rise to addressing social welfare at the impetus of social adhesion, rather than casting a safety net for the fallen.' we'd be right; they'd be wishing they thought of it or could afford it.

it is a great idea but flatly at odds with our WTO treaties, globalization, NAFTA, CAFTA and our long promoted IMF policies.

I am with you, but I also have no idea what could happen if the whole world engaged in a race to subsidize wages.

It reminds me of the concessions that cities make to sports franchises to win their residence. Those are almost always horrible deals for the cities.

do trade agreements cover tax policy and credits? while this proposal won't be stealth, it will be integral with our social services and public finance system. how deep does this trade shit penetrate? why? i file taxes quarterly. i think a rebate/subsidy could be settled quarterly, too. it is about time the US extend broad expensibility to labor in deference to the rhetoric and reality that employment is crucial to our economy.

this is only a tool for developed economies. you have to have swollen social welfare in order to make the policy neutral net expenditure. i argue that for china or india, there are diminishing returns for a reduction in labor prices, notwithstanding the fact that those returns are inferior to physical and social infrastructure investments on their to-do list. i think from their perspective, hopping into the subsidy war would be a mistake. some of the developing world already get down this way. this is how norway has a shipping industry, for example. among those nations best set to benefit, i argue that our tax system will best facilitate it, as would our manufacture base and population advantage.

bring on the war. we'll have at least a political cycle lead. furthermore, we're a consumer economy. we wont entirely reclaim our trade deficit, even with is approach, but our consumer demand base will arguably improve where, say $4 of 5 welfare bux get to beneficiaries and $6 of $2-3 subsidy bux will hit the streets for every employee even at minimum wage. that's at least as credible as a 3 million saved jobs estimate, anyhow. not everyone will jump on a racehorse to compete, i would think some companies might decide to come and try out our domestic labor market. another vw plant would be nice. the hope would be that more finishing, assembly, prep and packaging might return to the US, and that some heavy industry might be revived as well. dunno: the idea of broad subsidy is to let the market decide.

 

[loosecannon]

While China may not want to compete in this race with us, they may want to compete with say India, Russia and SK. And they have a distinct advantage in that regard.

Definition: Dumping is an informal name for the practice of selling a product in a foreign country for less than either (a) the price in the domestic country, or (b) the cost of making the product. It is illegal in some countries to dump certain products into them, because they want to protect their own industries from such competition.

UNDERSTANDING THE WTO: THE AGREEMENTS
Anti-dumping, subsidies, safeguards: contingencies, etc

WTO | Understanding the WTO - Anti-dumping, subsidies, safeguards: contingencies, etc

Subsidies and countervailing measures back to top

This agreement does two things: it disciplines the use of subsidies, and it regulates the actions countries can take to counter the effects of subsidies. It says a country can use the WTO’s dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects. Or the country can launch its own investigation and ultimately charge extra duty (known as “countervailing duty&#8221 on subsidized imports that are found to be hurting domestic producers.

The agreement contains a definition of subsidy. It also introduces the concept of a “specific” subsidy — i.e. a subsidy available only to an enterprise, industry, group of enterprises, or group of industries in the country (or state, etc) that gives the subsidy. The disciplines set out in the agreement only apply to specific subsidies. They can be domestic or export subsidies.

This is the clause that China relied upon recently to impose tariffs on US Chicken, under WTO rules.

 

[antagon]

china already competes with other mercantile/producer states. they're doing a pretty good job, and can keep at it. it is after all their prerogative. for the intent and purpose of sidestepping a characterization of subsidy it could be argued this is a tax policy. there's been trillions spent on lame, untargeted tax cuts since reagan, trillions more on entitlements since the depression, its our prerogative to redirect policy to high ground when this tired old shit stops working.

US agrisubsidy is naked, bare-faced subsidy. no where to hide.

 

[loosecannon]

yeah, tax policy. I am sure that nobody will notice it's a subsidy! A direct subsidy. lol!

 

[loosecannon]

We need to get the WTO to address currency manipulation and treat it like a subsidy or dumping. If you are gonna legislate globalization then you can't leave loopholes the size of the Titanic.

 

[william the wie]

A second part of this already mentioned to LC in another context is that as the teenagers leave home savings increase drastically. The only way to maintain national income with increased savings is to increase exports, which means that because the world is short of importers national incomes must decline so that savings will equal investment.

 

[antagon]

i think savings is overrated. i also think broad expensibility is a consumer subsidy which doesn't catch any heat from trade orgs.

 

[loosecannon]

i think savings is overrated. i also think broad expensibility is a consumer subsidy which doesn't catch any heat from trade orgs.

Yet, but it should and probably will if your plan is installed and the world continues down the WTO track toward full globalization. Just as currency manipulation isn't yet a certified WTO offense but will be, should be if things proceed according to the "plan".

I like your plan a lot. But it succinctly violates the spirit of globalization. In fact it is exactly what I prefer and China prefers: harsh mercantilism, protectionism in the midst of an orderly globalization bent world.

It's having your cake and eating it too.

Which beats the hell out of just sending your cake overseas in exchange for more purchasing power over plastic forks and party plates.

 

[loosecannon]

i think savings is overrated.

I tend to agree, but apparently there is some basis for savings in a national economy that I just don't get and can't even yet imagine.

But I am all ears if somebody can present a compelling case to the otherwise.

 

[Toro]

This can't be true Toro

The overwhelming number of examples in history feature currencies being backed by gold(A), and therefore worth more than currencies backed by silver(B) or currencies backed by the US Dollar (C).

In all of those cases those currencies did indeed derive their value from their reserves. Money always does unless it is unreserved fiat, self reserved fiat or debt based fiat.

That doesn't make Toro wrong about today's currency markets in the short run. All sorts of financial forms of hamburger helper have been with us forever. Traditionally people have trusted pm coins and jewelry but banknotes and bank drafts have always been treated as possible funny money.

For that matter pm coin debasement has been fairly common too. Henry I or II castrated and chopped off the right hand of all British exchequer gold smiths for passing funny money in their lending operations. Elizabeth I's treasurer was Thomas Gresham of Gresham's law fame, had to recall the various debased issues in order to get good coins into circulation. So I have to agree with Toro even though I think hard money and no central bank is the best system and he doesn't.

OK, but none of that is what Toro said.

He said:

I don't know of cuurencies ever being valued based on reserves. Reserves instead can be used to influence supply and demand.

Then he edited that to include that reserves were maybe one of many factors influencing value.

I am not trying to rag on Toro. I am looking for better explanations of how currency values are established. Because there are many examples today that seem wildly contradictory.

There are many ways to value currencies. You can use interest rate differentials. You can use purchasing power parity. You can use capital flows and supply and demand analysis.

What I was trying to get across was that I don't know of any analysis that uses reserves to value currencies in the same ways mentioned above. In multi-factor regression models, reserve levels may be a factor whereby the strength of the factor varies over time. But I don't do that, so I don't know. I just have never seen it, either in finance education, academic literature or active money management.

Your examples of using gold and the dollar as pegs I don't really think applies because such pegs are legal pegs, not market pegs. They are exchanges of the local currencies into dollars and gold by law. They aren't free floating and they aren't really what I would consider an exercise in valuation modeling by investors.

 

[Toro]

Changing the maturity profile of the national debt changes the stability of the dollar.

But it strengthens the dollar instead of debasing it.

The Fed buying Treasury debt is de facto monetization and weakens the dollar because it is increasing the money supply.

 

[editec]

Changing the maturity profile of the national debt changes the stability of the dollar.

But it strengthens the dollar instead of debasing it.

The Fed buying Treasury debt is de facto monetization and weakens the dollar because it is increasing the money supply.

You know I never quite understood that.

Here's why...T-bills are valued as money.

Banks holding them count them as money.

Based on their holdings banks lend money (which increases the money supply directly, too).

I mean I understand that the number of greenbacks in circulation will increase as the FED purchases T-bills, of course.

But as the dollar is just another promise to pay (and is valued according to the market's willingness to take them) so too are T-bills just another promise to pay and valued according to the markets willingness to take them.

You see why I am confused here?

What am I missing?

 

[Douger]

OK Sheep.
Line up and listen up.
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