On August 9, 2007, the eurodollar system cracked. Over the eleven years since that day, the crack has only become enlarged. No amount of QE nor the bank reserves those produced has been able to patch the system back up into functioning condition. The thing lingers on, limping forward through small ups and more serious downturns. One step forward, two steps back for the global economy. The stress that creates has over the past few years really started to show.

Not that you would know it by any kind of media commentary. The economy is doing really well, booming they say. Except like all of the so-called booms of the past eleven years this is the repeating of a political trick. On April 14, 1938, FDR said:

No. This was political spin designed to mask a political admission. The economy wasn’t good nor booming. Instead, Roosevelt wanted Americans to make peace with good enough. The world couldn’t, and so there wouldn’t be peace. 

The defining quality for the last decade, if there is but a single one, has to be QE. It was the rushed, emergency response that was supposed to deliver salvation…but didn’t. Many people have often associated the seemingly endless parade of the programs with heroin or cocaine; it is, after all, called “stimulus” in the textbooks.


I’ve always thought this was wrong, not just from a technical standpoint of what is or is not money. QE in my judgment was like anesthesia, effective only at numbing the pain of a world gone so terribly awry. Or alcohol, fomenting an international stupor so as to normalize people to a world so unlike what it used to be; to give, at least, some small hope for the future where more and more hopelessness invaded. The vibrant colors of even the insane housing bubble have been rudely replaced for the utterly drab world of “hey, we actually got 2% growth this quarter!!!”

That’s where we are again today. This purported boom isn’t like any in the past – except the one in the thirties. Calling this a boom is simply trying to get us to make peace with good enough. But it’s not good enough. Not even close. 

To understand why, just to understand it, we still have to go back to 2008. It’s 2018 but we aren’t yet done with 2008. One lost decade runs into a second. 

In remembering the significance of August 9, 2007, join MacroVoices and I for Season 2 of Eurodollar University. In it, we try to make sense of why the system broke down and in such a way it could not be restarted. Why it wasn’t subprime mortgages, nor even credit risk. The role of systemic redundancies in how they transformed into monetary bottlenecks. What was OTTI and why it mattered so very much. Where was Ben?

In addition, I’ll be joining Erik Townsend and Patrick Ceresna in Toronto on August 10. Fitting that we would be in Canada, offshore the United States, where I’ll look back at FDR, Alan Greenspan, and, of course, swap spreads, repo, and the missing hierarchy of money.

Like the “missing money” of the seventies, and even the missing recovery of the 2010’s, it’s not really missing. It just doesn’t show up in the mainstream, what with this boom and all.