Peachy Keen

A short post to convey my personal appreciation to Peachy for starting and running this site. Yes, you get what you pay for, with the site falling over at times and all, but!

It is a welcomed platform where we can share our unfiltered opinions and views on all things that interest us as an EZFKA community. It is also a place where we can engage in a dialogue and learn things that the mainstream internets just won’t allow.

A special thank you for all of you who contribute via posts or commentary that tends to be well thought-out and insightful. I may not agree with everything that is said; however, it is said with a deep personal conviction that requires thinking through another opinion. And, of course, the satire side, it is the best, and would certainly get one detained, and possibly deported, if expressed elsewhere. And we even have our very own trolls and clowns (me included) that add flavour and draw one into the most soothing experience f an internet shit-slinging. It is so….. 1999!

Love the community, but not sure I would hang out with some of yous in real life. 😀

All hail Peachy!

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Hoody

Monday morning’s edition of Sixty Minutes by the commander of the “Akhmat” battalion of special forces Chechen soldiers fighting in the Lugansk region, Apti Alaudinov. As deputy to the head of the Chechen Republic, Ramzan Kadyrov, Alaudinov has been interviewed on Sixty Minutes every day in past weeks as the battles headed towards their culmination. This privileged position on Russian airwaves is justified by the major contribution the Chechen battalion has made to the very challenging fight for control of the regional cities. The artillery battles in the suburbs and fields of Donbas are the job assigned to Russian soldiers, as we see from the interviews conducted on the front lines. These Russians either man the artillery pieces out in the open or sit in consoles of highly sophisticated rocket launchers. The Chechens are doing the very risky work of urban warfare, flushing out Ukrainian fighters from the basements of residential buildings and civil infrastructure, fighting street by street.
Alaudinov’s remarks on Monday about the way forward will surely be closely studied by Western intelligence operatives in Washington and Brussels for days to come before they percolate up into speeches of EU and US politicians. He said that following the liberation of all of Lugansk, Russian forces would continue their move South and West, or perhaps might on the way take Kiev. Then they could turn on the Baltic States, where, in his words, the armed forces of a country like Estonia were negligible. Until ordered to halt by the Commander-in-Chief, they might next take Poland.
Would a direct fight with NATO be intimidating, the program co-host Olga Skabeyeva asked.
With a broad smile on his face, Alaudinov said ‘no,’ the ‘LGBTQ’ led armies of NATO were no match for the forces of the Russian Federation. “Power to Russia,” he exclaimed in conclusion.

So it ends when the Russian decides it’s time to end.

Hoody

This probably did happen.

FW3EZF2VQAEgCv0.jpg
plaguerat

It’s a sad reflection on the leadership in EZFKA when the President of a South American country does more to protect the rights of an Australian citizen than does that citizens’ own government.

But then, of course, we’re told that we don’t engage in “megaphone diplomacy”……I guess it’s difficult to hold a megaphone while you’re down on all fours licking boots.

AMLO campaigns to dismantle the Statue of Liberty if Assange is convicted in the U.S.

President Andrés Manuel López Obrador said on Monday that if Julian Assange is convicted in the United States for the WikiLeaks case, a campaign should be launched to dismantle the Statue of Liberty in New York because that country would have lost its identity.

https://mexicodailypost.com/2022/07/04/amlo-campaigns-to-dismantle-the-statue-of-liberty-if-assange-is-convicted-in-the-u-s/

Peachy

All this stuff about Statue of Liberty is certainly very nice posturing, but we are currently in a phase of history where “principles” are frequently suspended and merely given lip service to – if not outright neglected – and basically might makes right. This is a bureaucracy gone mad and almost unaccountable.

so Julian’s best chance is probably with the courts, which have demonstrated the occasional ability to tell the bureaucrats to sod off.
assuming, of course, he will have access to real courts rather than some sort of military tribunal

A fly in your ointment

the ‘real courts’ is a no option,imv, if it was The Enemy nr.1 would be free by now.
The mere insistence if extradition in spite 100’s of opportunities to let him go and save face is a sign that exposing war crimes of the aspiring-2B-single hegemon are not going to go unpunished ever.

the posture of Mexico is really an Indication of the dilapidated relations of US with the world. Expect more of this as the world begins to openly reject US in spite the threat of being declared the threat to an imaginary world peace.

LostSocialist

The only reason that Julian is in trouble now is that the UK courts are completely corrupt. Craig Murray has done some excellent reporting on it as have some other independent journalists. https://www.craigmurray.org.uk/?s=assange
The MSM though being a mouthpiece of power has lied and smeared him the whole way through.

I think it is a good indication of what snivelling little morally corrupt shits labor are in Australia that they have done next to nothing to support Assange.

plaguerat

Events seem to be moving slowly in the right direction:

Attorney-General Mark Dreyfus orders Commonwealth to drop charges against lawyer Bernard Collaery
https://www.abc.net.au/news/2022-07-07/attorney-general-orders-charges-dropped-against-bernard-collaery/101217272

What a difference a Federal election makes.

Aussie Soy Boy

As I said in another thread, to be a yank in 2022 is like being a German in 1944. The world has had enough of listening to them Australia has chosen unwisely hitching their wagons to the nazi state on some flimsy promise that they will come to our rescue one day.

plaguerat

A doctor friend of mine suggested that a couple of these taken each day might help Albo address the Assange fiasco a little more successfully:

growacet-bp.jpg
A fly in your ointment

he probably needs stem cells to grow a pair beforentheybcan be enlarged.
Emasculation is not known to be reversible, in the history of medicine

plaguerat

Just when you thought it couldn’t get any sillier…….it just did:

Canadian military to allow skirts and hair coloring for soldiers

Canada has introduced changes in the nation’s military dress code, allowing servicemembers to have long nails, face tattoos, and to dye their hair. The new rules also permit men to wear skirts. 

https://www.rt.com/news/558477-canada-military-dress-code/

Hard to know whether to laugh or cry.

I guess if your rifle jammed up, you could always hit ’em with your handbag.

Coming

incredible

LSWCHP

New Minnit, homosexuality will be mandated amongst all Canadian soldiers.

There sure is some strange shit going on in Canada lately. It seems like they’ve all gone nuts over there. Hopefully it’s not a precursor to events here.

canuckdownunder

We won’t go all Civil War shit but there is a growing move for more autonomy in provinces like Alberta. Unfortunately the big cities there are also full of Jimmies.

DictatorDavid

Cancucks are only passionate about rioting if they lose the Stanley cup. Anything else and they bend over and take it, just like Australians.

Fitzroy Wanker

> Hard to know whether to laugh or cr

Yeah it’s a cry from me.

Is the consensus yet that west is being demolished? Militarily, politically, culturally, you name it. The capital is moving east to run the exact same pump-and-dump that gone on here for the last 70 years. The great reset won’t happen like many think. Not coming from Davos, but by terms of trade from the resource hodlers in the east where social control has been funded and perfected.

plaguerat

This one completely did my head in:

“Uniformity does not equal discipline, or operational effectiveness, any more than the colour or length of your hair defines your commitment or professional competence,” Gen. Wayne Eyre, Canada’s chief of the defence staff (CDS), said in a video CAF posted to Twitter on Tuesday.

https://www.cbc.ca/news/politics/caf-new-dress-instructions-1.6510961

As a mere ex-NCO, I would not normally argue with a General.
But in my experience, uniformity is the very essence of discipline and operational effectiveness….at least in the armed forces.
It is why we all wear the same uniform, are issued the same kit, train the same way, and use the same weapons.
From my limited knowledge of military history, I am not aware of a single group of individualistic, I’ll-do-it-my-way-’cause-I’m-different-to all-you-other-lot, group of individuals that have comprised a disciplined and militarily-effective fighting force.
The only military area in which a type of non-conformity is tolerated, and at times even encouraged, is in the “black-ops” ranks, where functioning as an individual in the field can sometimes mean the difference between life and death.
The average Grunt though, is constantly reminded that he is just part of a big uniformly-structured, disciplined machine, and conformity in all aspects of military life is the means by which this message is hammered home.

I wonder how many members of the PLA have purple hair, long fingernails, and a nice dress to wear?

Shakes head……

Ramjet

I would have though someone with long pink hair wouldn’t be all that well camouflaged. We are definitely living in a clown world.

plaguerat

Mate, they’ve got that one covered:

“For example, bright coloured hair may have a negative operational impact during field operations or training. Leaders are invited to discuss with their members to find a simple, suitable accommodation, such as a scarf to cover the hair.”

Used to be that one would be sent home from battle if one was seriously wounded.

Seems like soon, one will be able hop onto the earliest Red Cross flight if one has lost ones’ head scarf.

MR coal

An actual shooting war does wonders for clearing out the bullshit in the military in short order.

Ramjet

So Klinger from MASH is what the Canadian army’s future looks like?

LSWCHP

Yep. Apparently so.

LSWCHP

Ex infantry NCO here. Post Vietnam vintage.

I concur with everything you say. General Eyre is off his fucking rocker.

The Canadians have largely gone nuts. A bit like the Swedes.

Up in Valhalla, the spirits of the men who took Vimy Ridge must be roaring with furious rage at the insane leaders of their current army, and the even more insane leader of their current government.

Stewie

The easiest way to take over a nation is to seize its culture – it is a slow process, but like cancer if left untreated it will eventually secure certain victory.

plaguerat

In all fairness, though……it appears that conformity can still be retained, even if it involves red skirts:

communism-women-march-china-640x480.png
Peachy

And plus also

54B955E1-CEE0-42C2-AC96-376C149A7CDB.jpeg
plaguerat

Wow, Peachy….can you imagine if your lot and my lot went head to………..Oh, never mind.

LSWCHP

Yeah, I concur with The Gruppenfuhrer.

canuckdownunder

+1 to Peachy. I wish I could help out financially but I’m not a crypto boi.

Coming

I’m willing to send a couple of paper money notes in the mail to someone

Peachy

It is possible that something like this could be used to send small amounts of crypto: https://exchange.mercuryo.io/

or maybe we need a mule

Lazer Eyes

Yes, I offer my services to wash/embezzle/launder your fiat to Bitcoin and vicci vercca

Aussie Soy Boy

How much is it per month to cover costs?

canuckdownunder

Two random thoughts for the week:

1. Why this sudden ramp up of MOAR boosters? All of a sudden we’ve had a coordinated scare campaign by all the health ministers to bring out jab 4. And unlike flu vaccines which change every season, people are expected to take the original “vaccines” against the Covid strain from 2.5 years ago! I just had it last month, felt like shit for 3 days and then tired for 2 weeks.

2. If lending standards are so high in Australia, and everyone was tested against a 3% buffer, why are people already fucked after rates going up by 1.25%? Enough with the sob stories already, was anyone seriously stupid enough to believe the RBA could magically hold rates at 0 until 2024?

Peachy

was anyone seriously stupid enough to believe the RBA could magically hold rates at 0 until 2024

i believed for a while. I thought they had the nads for it.

means I think they would have, if Fed hasn’t zagged the other way.

plaguerat

Your random thoughts 1 and 2 are inextricably intertwined.

Random thought 2 is a indicator of the multiple freight trains headed our way.

Random thought 1 is an attempt by TPTB to convince us that we really should be looking “over there” at something else.

Ramjet

Seems over at EmBee, they believe that the increase is rates is a setup for Labor to fail. Seems that site is just full of IStandWithDan loonies.

A fly in your ointment

the format over at embee has transmogrified into a feed for FakeNews.dot.au and a few articles have been published recently. by the year end expect the subscriptions to be transferred across to the new domain and writers human typewriters on the payroll of their new masters

MR coal

couldn’t have happened to a more deserving bunch…

MR coal

 is a setup for Labor to fail.

Current board is I assume all liberal appointed and Labor are already making noises about wholesale replacement with a more “representative” board. It’s not beyond the realm of possibilities that this is indeed the case.

Ramjet

MOAR boosters is to distract us from the fact that the war in Ukraine is not going well and will last longer. Brandon was saying that US drivers will put up with higher gasoline prices until the job is done. Also to distract us from the recession that we will enter soon.

canuckdownunder

I considered the distraction angle but I thought the push was only happening in Australia. Canada is doing the same thing now so maybe it is all a smokescreen.

https://www.cbc.ca/news/canada/toronto/covid-19-ontario-vaccine-4th-dose-booster-1.6506746

What’s hilarious about the regulations there is that First Nations are already allowed the 4th jab. Is it the same here, do we use the Aboriginals as the first experimental group?

DictatorDavid

In WA they were paying Aboriginals to come and get their jabs. From memory the community wasn’t keen so they had to entice them with a few hundred dollar payments.

Peachy

What never ceases to amuse (amuse, not amaze) is how stupid people is!

LSWCHP

MPAI (Most People Are Idiots).explains almost everything about the modern world.

Alternatively, consider that 50% of the world’s population is of below average intelligence (I know …mean vs median yadder yadder), which has similar explanatory abilities.

A fly in your ointment

Stupidity comes with some benefits and similarly intelligence comes with some disadvantages. It is neither linear neither 1D.
The best balance comes at about median intellectual abilities. Some would argue that on this island the more cognitive cohort fare much worse off than the other mob.

A fly in your ointment

neither/nor… cannot edit

Gouda

Lowe was saying the same thing every month from February 2021, basically that he couldn’t see the conditions for inflation and raising rates until 2024. Easy to see how people could get sucked in – bulls and bears who had given up, especially given all the housing and building related stimulus that was being thrown around by the Morrison government during the pandemic. We had those 25k renovation grants (I’m sure many investor/owners also tapped into “equity maate”), access to super (which people used for a deposit) and the popular Family Home Guarantee where only a 2% deposit was needed.

For me it was the last straw. I remember thinking it was a sign they were going to stick to ZIRP to pump up the bubble at all costs in pursuit of the  EZFKA way, and later that year when I was evicted and decided to buy it was more out of resignation as well as knowing that if rates did spike I’d be relatively immune. Of course, Lowe had started to change his tune by November but I’d already hit 100% offset so didn’t care.

Interestingly with the first two rate rises I heard nothing from my bank regarding a higher repayment. Just before the last rise I was informed that the repayment would go up about $300 a month from September, but after this month’s rise it was brought forward to August. There’s going to be carnage, and I’m here for it.

Peachy

For me it was the last straw. I remember thinking it was a sign they were going to stick to ZIRP to pump up the bubble at all costs in pursuit of the EZFKA way, and later that year when I was evicted and decided to buy it was more out of resignation as well as knowing that if rates did spike I’d be relatively immune. Of course, Lowe had started to change his tune by Novembe

ah yes, EZFKA grindS you into submission.

By making sure that there is no good alternative.

by inconveniencing and humiliating the renter

by saturating the media with house worship

by making it appear an inevitability.

by jingling a couple of minorly attractive trinkets (a nice kitchen or solar panels?)

I was reading Biderman’s Chart of Coercion the other day… most elements are there.

Last edited 4 months ago by Peachy
Coming

https://www.dailymail.co.uk/news/article-10986471/Australia-siege-multiple-viruses-Expert-says-lockdowns-demolished-immunity.html

file this under “whocoodanode”

unfortunately for them, these public health “experts” have zero credibility with the public now, and so they have been completely sidelined

They just sound increasingly shrill and hysterical, while government completely ignores them

The government of courses relaises that the majority of the population has at least tacitly accepted that covid is nothing much to worry about, and that lockdowns were a HUGE mistake (probably the greatest policy error in the history of the west at least – maybe on par with some of Mao and Stalin’s policy decisions)

Still angers me that nobody is publically acknowledging that the inflation problems (and societal problems) we are dealing with now are all because of lockdowns, but blaming it on “money printing” and russia

And also the tremendous damage to society, and especially to children

especially nobody is listenting to that jabba the hut bitch Catherine Bennett – imagine giving people health advice when you are the size of a small planet

Peachy

Still angers me

jabba the hut bitch Catherine Bennett – imagine giving people health advice when you are the size of a small planet

you mad, bro?

😂

Gouda

Bennett was anti-mask, anti-lockdown and very critical of the Andrews government. Thought she’d have plenty of fans here!

MR coal

Clearly, because everyone was getting the flu all the time pre covid, weekly even…

Aussie Soy Boy

Apart from Melburnians I suppose who had it rough, who are all these people who were locked down for two years?

There were heavy restrictions at times, mass events were cancelled, more people worked from home, and a lot of the rules were arbitrary and served no real purpose, it was a terrible period, but weren’t most people just ignoring the rules? People kept on flooding retail/grocery stores, most people still did their own thing socialising in private, half the people had masks on their chin.

I’m sure it contributes to some degree of lower immunity the lockdowns and restrictions no doubt.

But no-one apart from the biggest hypochondriacs were living a bubble.

Apart from not being able to travel my routine didn’t really change a great deal under COVID. I’ve worked from home for part of the week for years. Over the course of an entire year I didn’t really go to pubs, restaurants, etc any less it was just more concentrated into specific periods rather than spaced out over the year.

So I’m a candidate for lowered immunity, but I don’t get sick, been years since I’ve had a cold, been around crowds of people throughout winter and can’t seem to catch anything.

Aussie Soy Boy

What amuses me is when the British use lowered immunity as an example. They ignored the rules from about June 2020 and was open slather again with no rules since July 2021. Their big freedom day was almost 12 months to the day.

Coming

yes it was the lockdown – we stopped human contact, and antigen exposure

no, the vaccines do not give you VAIDS

In particular, there has been an epidemic of RSV in infants
And they have not been vaccinated

The insane conspiracy theories are funny, but getting a bit boring

Aussie Soy Boy

yes it was the lockdown – we stopped human contact”

I don’t know anyone who did. Less human contact, but no-one spent 2 years without exposure to other humans. Maybe a few weeks at the start of it, but everyone still went grocery shopping and queuing up for toilet paper in that period.

bjw678

Flu is not caught be everyone every year.
Maybe every 5-10 years someone gets the flu.
Flu has different strains every year.
These do not add up to lockdowns are the cause in any logical way.
VAIDS may exist, it may not, but the story being told is stinking bull manure.

In particular, there has been an epidemic of RSV in infants

And they have not been vaccinated

Should you drink while pregnant?
Or thalidomide…

Stewie

Exactly, I was saying the same thing the other day. So what, we’ve been in a lock down for a year – its not like I get the flu EVERY year.

The explanation repeated ad Infinium in the media, is that our immune systems are run down because of last years lock down just doesn’t add up. Like many accepted ‘facts’ it has been repeated so often and so frequently that it is now accepted as common knowledge.

For your average NPC the superficial plausibility is enough, but the slightest bit of scrutiny and its plausibility diminishes rapidly/

Coming

you can test positive for influenza nasal swab, without being symptomatic

just like you can for covid

that is you have been exposed to it, it has possibly even replicated to some extent in your nasopharynx

but you don’t have a clinical infection

your immune system has therefore been exposed

this is the problem with people like bjw who have no idea about medicine making comments

Peachy

Can’t it just be more along the lines that:

  • we don’t get a bad flu every year
  • but we ARE exposed to various flu viruses every year
  • most times, our immune system combats these viruses very effectively, so we don’t even notice the infection; at the same time, immune system gets trained.
  • every few years, your system doesn’t cope with a flu variant and you get really sick/unwell

the lockdown interrupted items 2&3, perhaps?

Peachy

I think that’s jsut what coming said, above

LSWCHP

Just googled for Ms Bennet.

Fuck a Duck. 😳

Lazer Eyes

An update on the couple struggling with the 1.5 million mortgage.
https://twitter.com/longhorncapital/status/1544546505448558595

Ramjet

She is a litigation lawyer and she is using the publicity to test the waters as to whether she can start a litigation case.

DictatorDavid

Let’s be honest if we EZFKA hasn’t changed (it hasn’t) then the likely outcome is this will get up and these people will get paid back 4 years of interest.

LSWCHP

Ibrahim, hey. Best news all day. She can GOAGF, and then ESAD as far as I’m concerned. I hope her children all die of cancer.

Gouda
Peachy

Hehehe yeah, dat be a good one as well!

DictatorDavid

RBA drops a neutron bomb on the Aussie housing market and makes a heinous mistake in its monetary policy statement
https://www.livewiremarkets.com/wires/rba-drops-a-neutron-bomb-on-the-aussie-housing-market-and-makes-a-heinous-mistake-in-its-monetary-policy-statement

“As we have explained before, we expect the RBA’s hikes to trigger a 15-25% decline in national dwelling values, which would be the largest destruction of household wealth in modern times. The RBA’s own housing model points to a bigger, 30-40% decline, which would reverse-out all of the post-pandemic capital gains. ”

Things are getting juicy. Wonder when government panics and starts throwing in the kitchen sink ie. raiding super

MR coal

Or throws labor under the bus?

The RBA seems to be making far less favourable announcements and decisions post election…

plaguerat

First prize in the 2022 Federal election was always going to be a large, very impressive Poisoned Chalice.

DictatorDavid

I actually suggested this would happen if labor got elected in one of the prediction threads and was dismissed. RBA is totally independent yadda yadda

Gouda

For now, Phil and the RBA seem to be copping more flack than Labor.

I think those who would dismiss the housing affordability crisis by pointing to 17% interest rates in the 80s and have benefited the most from decades of pro property policy can’t suddenly complain if they find themselves over-leveraged.

Peachy

RBA drops a neutron bomb on the Aussie housing market and makes a heinous mistake in its monetary policy statement

Neutron bomb, huh?

It has all been foretold. EZFKA covered the neutron bomb angle previously:

https://www.ezfka.com/2020/11/03/macrobusiness-begins-to-grok-ezfka-prays-for-neutron-bomb-to-eradicate-ezfka-residents-and-remnants-of-culture-for-the-benefit-of-the-fx-rate-tradeables-financial-stability/

and not just “previously” but 18 months ago!

Last edited 4 months ago by Peachy
DictatorDavid

I see peach and EZFKA ahead of the others once again.

Coming

This is an interesting passage

Yet nobody seems to seriously believe market pricing for the cash rate, which is attributable to one-sided illiquidity in interest rate derivatives that has been evident since the RBA–by its own admission–deeply damaged its policy credibility by suddenly dropping its 2024 interest rate peg in November last year.

I remember discussing this with Freddy a month or two ago – why the futures market is not meant to be an accurate predicition of where the overnight rate will be
I suggested at the time that there was some disconnect, that was affecting the pricing of these contracts but not necessarily implying anything about the future cash rate

Joye goes on to say

The consensus view is that once the RBA restores the credibility of its policy framework, market liquidity in interest rate derivatives, and objective pricing for the path of the RBA’s future cash rate, will adjust back to more normal levels.  

Still not clear to me whether it is the dog wagging the tail, or vice versa

Last edited 4 months ago by Coming
Freddy

Joye is referring to the Cash Rate futures. They are very much a bet on where the cash rate will be.

What you are saying has some merit with bonds which are not directly linked to the cash rate. Although supply/demand based on yield would ensure some correlation. Speaking of which…

Still not clear to me whether it is the dog wagging the tail, or vice versa

When RBA lowered the cash rate during Covid they had to also buy bonds. Otherwise there would have been a flight to from banks to bonds to chase higher yield. This in turn would have forced the banks to seek more funding possibly by raising deposit rates out of step vs OCR. So, I believe the answer is when central banks are manipulating yields across the board they are very much in control. When they are just playing around with OCR they are essentially a passenger.

Last edited 4 months ago by Freddy
Coming

When RBA lowered the cash rate during Covid they had to also buy bonds. Otherwise there would have been a flight to from banks to bonds to chase higher yield

im assuming this is a typo – should read “A flight FROM banks (presumably deposits) to BONDS”

Basically, you are saying they have to do yield curve control?
If the RBA cuts IOER, then banks will cut interest rates on at-call deposits
At-call deposits aren’t the same as term deposits though

He says “no one is believing market pricing for the CASH RATE, which is attributable to one-sided illiquidity in derivatives

In other words, they are not reflecting where the market thinks the cash rate will be. They are distorted by some type of illiquidity or inefficiency/hedging but he doesn’t really expand on how

Freddy

Basically, you are saying they have to do yield curve control?

Yes. If they want a cash rate that is significantly lower than bond market yields they have to purchase bonds.

If the RBA cuts IOER, then banks will cut interest rates on at-call deposits

Excess reserves are an oversupply of funds (including deposits) that the banks hands over to the RBA? I am talking about the situation where bonds rates are much higher than deposits rates and money fleeing the banks threatens to become an undersupply of reserves.

He says “no one is believing market pricing for the CASH RATE, which is attributable to one-sided illiquidity in derivatives

The people who are putting their money where their mouth is believe the rates are going much higher. This is where I find Joye’s comment a little silly. His company profits from money market mispricings. If he is so sure about himself why doesn’t he short those markets and bring them down to his belief of fair value? Edit: maybe he has and is talking his own book

Last edited 4 months ago by Freddy
Coming

If they want a cash rate that is significantly lower than bond market yields they have to purchase bonds.

Can you explain – why do they have to do this ?

the cash rate has had no problem staying below bond market yields

in fact central banks have to pay interest on reserves just to get overnight rate UP

Because there is such an excess of reserves in the system

don’t really think fleeing deposits are an issue

im afraid I’m not really following

The people who are putting their money where their mouth is believe the rates are going much higher.

how? By staying in cash ?
or by futures bets ?
if the latter, then isn’t his whole point that it isn’t because they really think overnight rates will be that high ?

Freddy

Can you explain – why do they have to do this ?

Money flows. You wouldn’t keep your money in a bank earning zero percent when the risk-free rate of government bonds is at 2 or 3%. Money would leak out of the banking system. The gap in yields needs to close to stop those money flows. One of two ways:
1) Deposit rates rise to levels higher than OCR.
2) Bond rates need to fall. RBA bond purchases

This becomes a little more complicated with offshore funding. The only thing I will say on this is Australia had close to highest rates in OECD and hence banks were easily able to source offshore funds. This is not longer the case.

in fact central banks have to pay interest on reserves just to get overnight rate UP

It is part of the same problem. My understanding is overnight rate is the actual real Cash Rate. OCR is a target rate. RBAs objective is to inject or remove liquidity to achieve the target rate.

So what would happen if RBA refused to pay interest on those excess reserves? To my mind the banks would not pass on any of that interest to their customers. Short term there would be excess liquidity in the system until customers shifted their money out of the banking system. End result would be loss of excess reserves. The question that should be asked is why is the RBA so desperate for banks to retain those excess reserves?

how? By staying in cash ?

or by futures bets ?

if the latter, then isn’t his whole point that it isn’t because they really think overnight rates will be that high ?

A futures bet is a bet. If I go long the December futures at current 3.05% and OCR only ends up being 2% at expiry date, then I am going to lose a lot of money. They absolutely believe OCR is going that high.

Freddy

Adding some more info after reading CFD contract specification. They are priced like Bonds (rather than rates). I got my long/short around the wrong way. If you believe rates are going higher than 3% for December you short current price of 97.

Even though the price looks like a bond they are a highly leveraged CFD. You don’t receive any yield. You just win or lose money depending on the final outcome at expiry.

One thing I didn’t know is this bit below. It makes sense as I mentioned above the Official Cash Rate is actually the overnight rate rather than the target rate announced by the RBA:

Cash Settled against the monthly average of the Interbank Overnight Cash Rate as published by the Reserve Bank of Australia for that contract month

Last edited 4 months ago by Freddy
Coming

 You wouldn’t keep your money in a bank earning zero percent when the risk-free rate of government bonds is at 2 or 3%. 

Well I definitely would
Firstly for convenience
Secondly because there is no duration risk

If you’re talking about 30 day bills or something – how is that different from just taking out a one month term deposit (with a small margin for the bank for convenience sake)

It doesn’t necessarily have anything to do with the overnight rate (except see below I guess)

My understanding is overnight rate is the actual real Cash Rate. OCR is a target rate. RBAs objective is to inject or remove liquidity to achieve the target rate.

This hasn’t been the case since QE started
Once upon a time repo/RRP was used to set the target rate, by adding/draining reserves until an appropriate balance was reached

Now that is abandoned for an interest on reserves payment, to set a floor for rates
They have no need to set a “ceiling” because there are now so many reserves that the rate would be 0 if they didn’t interfere

I guess if long yields rise, then banks would buy long bonds with their excess reserves
The problem with this is that I don’t really understand what banks can do with reserves

-If they can only use reserves to buy things from other members of the reserve system (eg other banks), then its a wash: the net number of reserves in the system is the same. But I guess each INDIVIDUAL bank would want as few reserves as required, since they only get IOER (1.25%) on those and they could get more buying bonds

-If they can use their reserves to credit deposits of private accounts, then they could buy bonds from private depositors CREATING new deposits and also CREATING an extra reserve requirement. The thing is that at least in the USA there is no longer any reserve requirement (hence in the US, the fed know longer described IOER but simply IOR – there is no way to have an excess). So a bank using reserves to buy an asset from the private sector, and thereby creating deposits, would actually be money printing

Its just unbelievable that its so hard for me to find out if this is possible. This joseph wang guy says that it is, but there are others that say there isnt

So what would happen if RBA refused to pay interest on those excess reserves?

The cash rate would fall to zero.
Which is why in order to raise rates they have to raise IOR

Now, I guess you are suggesting one of the two scenarios I mentioned above – but why hasn’t it already happened? Or happened when IOR was 0 (or there were negative rates in some countries)?
I guess because at the time long rates were much lower too? And a constant slope is implied as duration increases?
So when the yield curve inverts, what happens to IOR? It doesn’t make sense that any bank would want to buy long bonds at 1%, rather than take IOR at 1.25%
You would say “well they expect IOR to be much lower in the immediate future”

Have I got this correct?

A futures bet is a bet. If I go long the December futures at current 3.05% and OCR only ends up being 2% at expiry date, then I am going to lose a lot of money. They absolutely believe OCR is going that high.

Yes that certainly seems correct
So as I said I don’t understand what Joye is trying to say exactly, but there must be something – no economist or bank has predicted that rates will go that high, so who is on the other side of the bet?

Perhaps it has something to do with what Joye is alluding to – they don’t trust the RBA
For instance in the scenario I have given just above “well they expect IOR to be much lower in the immediate future” – perhaps in this case they don’t trust the RBA to lower IOR appropriately? Perhaps they expect a persistently inverted yield curve or something?

I have no idea and I don’t really understand, thanks for the discussion

Freddy

This hasn’t been the case since QE started

Once upon a time repo/RRP was used to set the target rate, by adding/draining reserves until an appropriate balance was reached

Now that is abandoned for an interest on reserves payment, to set a floor for rates

My argument is they control rates by controlling money flows in/out of the banking system. There is no single tool they use. Look at it holistically:

  • QE/QT is a manipulation of money flows in/out of bonds
  • IOER is a more direct manipulation of money flows between the banks and RBA
  • Direct intervention on exchange rates during GFC and Covid crashes

Probably many more tools including other ones you mention. I don’t need to know all the intricate details. I just need to understand that rates can’t be forced lower if money is fleeing the banking system.

I don’t understand what Joye is trying to say exactly, but there must be something – no economist or bank has predicted that rates will go that high

Joye is like MB in believing RBA will be forced to back off one way or another. Nobody knows for certain how high rates need to go to kill inflation or cause a recession.

so who is on the other side of the bet?

It would be a mixture of punters and mathematicians. I bet there are some smart cookies who have arbitraged via FX, government bonds, etc.

Coming

What you are saying is

the RBA is paying (higher) IOR to stop reserves leaving the system (to seek higher yields elsewhere )

Have I correctly represented your position ?

Freddy

No. I am not familiar with what the banks can do with that money. I would guess that it wouldn’t matter longer term whether the excess reserves are earning yield at the RBA or elsewhere. Immediate term though if RBA were to lower IOR then it would make sense for the banks to use their excess reserves instead of being charged to borrow money overnight?

Coming

Well that’s the thing

reserves can’t leave the reserve system . They can only go to other banks or to the fed (in repo)

The federal reserve website states that IOR is intended to “create a floor” for overnight rates , and Milton freedman said the same thing

So the RBA and fed can make the overnight rate whatever they wish

but I would think that lifting it causes bond prices to fall (and bond yields rise) , as banks can get risk free return from IOR so will sell bonds

and correspondingly dropping it would cause bond prices to rise (and yields to fall) , as banks would buy bonds to get a better return

and that is why I am dubious about what the effects will be of lifting IOR to manipulate the overnight rate

for starters, it is constant flow of new reserves into the system – it is constantly expanding the balance sheet and liquidity. which is inflationary

secondly, paying higher IOR should as far as I can imagine and all other things being equal, cause bond yields along the curve to RISE (as banks would be more inclined to keep reserves and get risk free IOR if not compensated ).

Which also suggests INFLATION

so we would have a situation where reserves are INCREASING, while at the same time rates are RISING

to me this suggests a cat chasing it’s tail
the RBA lifts IOR, long bonds yields rise (or rise on expectations of such) , the RBA is then by extrapolation expected to lift IOR again, and so on and so forth

additionally, the extra reserves created through the interest paid is essentially the same thing as QE ie money printing . Would this cause real inflation ? and therefore a self perpetuating cycle

Needs to be offset however against the reduction in new loan creation

and then you need to think about what it does to government spending

it does suggest that QE has caused quite a bit of fuckery , and I don’t think most people have their heads around it
prior to that they never paid IOR , they drained excess liquidity with reverse repo

Last edited 4 months ago by Coming
Peachy

prior to that they never paid IOR , they drained excess liquidity with reverse repo

Whatchu talking about? The substance or the form?

Coming

wat

Peachy

Are you saying that banks never got paid a return on their excess reserves/balances with RBA?

or that it was provided in a different form (repo)?

Coming

My understanding was that previously, there were just sufficient reserves in the system IN AGGREGATE

The rest was drained (or added) by the RBA by repo/reverse repo

if one bank was short, then they would borrow reserves from another bank who had excess
If a bank couldn’t get someone to lend to them, they could go to the discount window and borrow directly from the rba/fed

So there was no new reserves coming from the RBA

But I would be interested to hear differently

Freddy

reserves can’t leave the reserve system

We were talking about Excess Reserves. I have just read up about it and the banks can do whatever they like with it. Lend, reinvest, whatever.

I believe what I suggested above is likely to be true. RBA must pay the cash rate on Excess Reserves or the banks will subvert the overnight rate by holding onto some of those excess reserves to avoid incurring overnight rate interest.

Coming

The fed now pays interest on all reserves (its called IOR now)

That is because there is no such thing as reserve requirements now

My understanding is that reserves cannot leave the reserve system (except by reverse repo)

If the bank buys something with the reserves , then they buy it from another bank (or from the RBA) within the reserve system

But, some people have said that they can use reserves to buy from private individuals

https://fedguy.com/can-banks-spend-their-reserves/

To me this seems off – but I can’t find any official source to verify

Chuckmuscle

There’s not much of a bid out there for cash rates, mainly offers, hence yields up.
My best guess is because 1. rates were so low already, not much upside potential 2. DM central banks are all tied at the hip so better to trade eurodollar futures where there is meaningful liquidity for STIR traders (AU rates really are a drop in the ocean) 3. if a speculator, really hard to make money on cash rate futures, better to just buy 3yr bond futures cause get way more leverage.

In short, AU front end rates is such a Mickey mouse market, no one serious is trading them

bjw678

why the futures market is not meant to be an accurate predicition of where the overnight rate will be

A futures market is only a predictor in the same sense that the TAB is a predictor of the outcomes of horse races. It aggregates and averages a whole lot of peoples predictions of what will happen and is only ever as good as the people playing.

Still not clear to me whether it is the dog wagging the tail, or vice versa

Must be great living in your strictly black and white world. Do you ever wonder what grey is?

Or to put it more bluntly, nothing is ever that simple in the real world…

plaguerat

For those who enjoy the occasional laugh at lifes’ little ironies:

Sitrep Britain: The Titanic Hits the Iceberg

Already, before Johnson has actually gone, some are speaking of a future Indian Prime Minster for the UK, the resigned Rishi Sunak, former Chancellor (Minister of Finance), married to the daughter of one of the richest billionaires in India. What an irony: the coloniser is colonised and the top job may go to a man from the most exploited and pillaged British colony of all.

https://thesaker.is/the-titanic-hits-the-iceberg/

I guess it’s a case of….what goes around, comes around.

Stewie

“I answer that, Man’s relations with foreigners are twofold: peaceful and hostile: and in directing both kinds of relation the Law contained suitable precepts. For the Jews were offered three opportunities of peaceful relations with foreigners. First, when foreigners passed through their land as travelers. Secondly, when they came to dwell in their land as newcomers… Thirdly, when any foreigners wished to be admitted entirely to their fellowship and mode of worship. With regard to these a certain order was observed. For they were not at once admitted to citizenship: just as it was law with some nations that no one was deemed a citizen except after two or three generations, as the Philosopher says (Polit. iii, 1). The reason for this was that if foreigners were allowed to meddle with the affairs of a nation as soon as they settled down in its midst, many dangers might occur, since the foreigners not yet having the common good firmly at heart might attempt something hurtful to the people.“,

Saint Thomas Aquinas

Had the West headed this advice, our nations would still be our own.

robert2013

I suppose we are a kind of community but calling us an “EZFKA community” feels wrong given that the captial letters are meant to convey the lack of community in our place of residence. Also, I noticed the copyright symbol at the bottom of the page. Is the EZFKA a legal person?