Alex Krüger Profile picture
Jul 22, 2018 16 tweets 5 min read Twitter logo Read on Twitter
1/ The US Dollar may not be redeemable in gold, but the US Dollar is backed by various assets, including gold, as required by law. (see…) #economics
2/ The answer to this poll was "the US Dollar is backed by Assets". Only 6% got it right (that is 87 out of 1443 people). And many for the wrong reasons (yes, guns are assets, yet not the assets backing the US Dollar).

3/ Second best answer would have been "Debt", or "Debt securities", which were not an alternative. Every debt deed is a liability for someone and an asset for someone else.
4/ To be clear, "backed by" means COLLATERAL (collateralized by, to be precise). The US Dollar is collateralized by various financial assets. Some may choose to disagree with the definition of "backed by.
5/ Next time anyone says "the US dollar is backed by nothing!", show them this chart. Those assets back the US Dollar.
6/ This chart expands the picture, further illustrating the Fed's balance sheet.
7/ This Investopedia entry on the topic is surprisingly good.…
8/ Now addressing some of the responses. The US Dollar is Legal tender for all debts. That's what it is, not what it's backed by. See this link:….
9/ "backed by the full faith and credit of the US Government" is often used in reference to the US Dollar. It's a borrowed phrase. Won't find it in legal documents. It's applicable to most of the assets backing the US dollar (treasuries, agency MBS, etc).…
10/ One may have qualms against US government securities as in "it is backed by nothing" or only "it is backed by the full faith and credit of the US Government". Fact is US government debt securities are one of the most liquid and widely accepted assets in the world.
11/ Congress has specified that Federal Reserve Banks must hold collateral ... but it is not Congress itself that backs the US dollar, but the collateral.
12/ Exports, taxes, GDP ... all help towards the US Government's ability to repay its debt obligations, and thus make the collateral backing the US dollar more valuable ... but are not the collateral backing the US dollar.
13/ Missiles, weapons, the military, etc ... all are arguably valuable to shore up the power of the USA, and therefore the ability of the US government to repay its debt obligations ... but are not the collateral behind the US dollar.
14/ TLDR the US dollar is backed by assets. This is required by law, as mandated by congress. Most of these assets are US government debt securities (public debt) or agency mortgage backed securities (private debt),
which are "backed by the full faith and credit of the US Govt".
15/ "backed by assets" =/ "fully backed by assets".

The Fed (or Federal Reserve Banks, to be precise) holds collateral for all currency and reserves i.e. monetary base, not so for the monetary supply. To cover this need to get into fractional reserve banking & money creation.
16/ Will cover Fed mechanics, monetary supply, money creation, and fractional reserve banking later on.

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More from @krugermacro

Oct 4, 2018
Lot's of talk about Tether & Bitfinex, some even mentioning "exit scam". Crypto pairs in Bitfinex are trading at 0.75%-1% premium over spot exchanges. However, same can be observed in Tether exchanges. e.g. prices in Binance same as in Bitfinex =>this is not a Bitfinex issue.
A couple of red flags aside, I don't think there is reason to be particularly concerned. Selling of Tether for other asset-backed stable coins is to be expected.
Now anyone operating in an exchange exposed to Tether or one that performs no KYC is always exposed to some sort of tail risk. Only way around that is moving to crypto-fiat regulated exchanges, which have higher operational costs (KYC is expensive) and charge higher trading fees.
Read 5 tweets
Oct 3, 2018
Narrative: "My top priority has always been our social mission of connecting people and bringing the world together" ~ Zuck.

Reality: "People ... I don't know why. They "trust me". Dumb fucks." ~ Zuck.

His top priority is using people to sell targeted ads. #deletefacebook
It all started with Facebook's Timeline, an intrusive interface designed to push ads. Other things followed: recording phone logs, hacks, 3rd party apps snooping, discriminating users, nudging for users to provide more and more and more information, etc.
Read 4 tweets
Oct 2, 2018
Brazil stocks +5% today in USD terms, strictly on political news. Chart locks great for longs. 1st round Presidential elections Oct/7. The two most voted candidates go onto a 2nd round on Oct/28.
Chart aside, what one trades is the elections: Bolsonaro (right-wing populist wildcard, similar to Trump, initially despised by markets, now seen positively as much better than the alternative) vs. Haddad (left-wing candidate, Lula's party).…
Two things behind today's rally.

- new info on the corruption scandal involving Haddad's party:…?

- more importantly: Ibope polls showing a sharp improvement in Bolsonaro's odds.
Read 4 tweets
Sep 29, 2018
1/ Key factors for global markets

- Fed tightening: rising rates, balance sheet reduction, USD funding squeeze. Fed expects three more hikes in 2019.
- US economy overheating. Fiscal cuts in action, US profit margins at all time highs, unemployment at lowest level since 2000.
- US treasury curve inverting, pointing towards incoming recession.
- Oil spiking in response to demand shocks and low spare capacity could lead to increased inflation and tightening.
- Ballooned public and corporate debt levels.
- Trade wars: US tariffs would result in China's GDP dropping 75bps. Worldwide spillover effects.
- To compensate, China looking to reflate domestic economy via spending & monetary easing.
- EM at risk from Fed tightening and strong USD; are these already priced in?
Read 5 tweets
Sep 29, 2018
Chart shares one of my signals which I call the Volume Thrust. It's a high volume/volatility breakouts signal. Can be applied to multiple time frames i.e. five minute charts or daily charts. Sharing it to illustrate price action concepts.
Understanding this is useful for investors as well who want to enter positions only with the trend. It's also helpful to any trader who is fearful of buying a top. Buying a top or selling a bottom sometimes represents good decision making.
First, when there is a high volume push in one direction, a trader generally wants to go in the direction of the push. Second, when push fails and price reverses in full beyond origin point, that's a trap, trader wants to reverse position (or at least exit prior position if any).
Read 11 tweets
Sep 27, 2018
This could happen to crypto exchanges offering trading of security tokens and security token derivatives. If $XRP were to be defined as a security it would jeopardize exchanges such as Bitmex. Binance is at risk regardless. Lots of security tokens there.
Sounds familiar?

Just yesterday I was reading about how 1broker had started offering CFDs on cannabis stocks, offering traders to open an account with an email address, fund it with bitcoin, and hit it with 50x leverage.
Read 8 tweets

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