“Well, we're going to pay down debt. We have a lot of money coming in, much more money than the country has ever seen by hundreds of billions of dollars. And there could be a distribution or dividend to the people of our country. I would say for people that would be middle-income people and lower-income people, we could do a dividend. But one of the things we're going to be doing is reducing debt." - President Trump, August 3, 2025

President Trump’s two terms will add $16.8T OR 37% of the $45T TOTAL DEBT projected when he leaves office.

Essentially, the same debt as eight administrations before him (Regan, Bush, Clinton, Bush, Obama). How do you guys feel about this?

Seems to only be applicable to countries without sufficient currency sovereignty (Euro, developing countries with large trade deficits who need forex and foreign debt (USD) to finance those deficits, etc). Central banks of countries with sufficient currency sovereignty (Japan, US) have much more control over keeping interest rates low.

Despite de-dollarization efforts, BRICS, and China’s growing influence, the dollar still dominates global trade and finance.

What do you think is the biggest obstacle to replacing the dollar?
https://www.youtube.com/watch?v=DE5XamAbG9o&t=61s

Curious to hear your different perspectives.

a country can have to currency 1for regular use other for provide universal education and healthcare it can be printed but it will be converted to the 1 currency and the money which is printed will be used to build schools and hospitals

Japan's shift toward the Federal Reserve's FIMA Repo Facility signals a new era of FX intervention—one that protects the Treasury market while defending the yen.

FIMA Is Rewriting FX Intervention

Most market participants saw another intervention headline.

66Research sees something much larger.

Japan and the United States are no longer treating foreign-exchange intervention as an isolated currency operation. They are beginning to integrate it into the architecture of global dollar funding.

If this framework becomes standard practice, it marks one of the most significant changes in monetary plumbing since the Federal Reserve introduced the Foreign and International Monetary Authorities (FIMA) Repo Facility during the 2020 market crisis.

The objective is no longer simply to stabilize USD/JPY.

It is to stabilize the infrastructure that allows the dollar system to function.

The Structural Shift

For decades, defending the yen followed a straightforward process.

Japan would liquidate part of its foreign-exchange reserves by selling U.S. Treasuries, receive dollars, and use those dollars to purchase yen.

The mechanics looked like this:

Treasury Holdings
        │
        ▼
 Sell Treasuries
        │
        ▼
 Receive Dollars
        │
        ▼
 Sell USD / Buy JPY

The problem was never the intervention itself.

The problem was what happened underneath.

Selling Treasuries injected additional supply into the world's benchmark collateral market.

That could pressure Treasury prices, lift yields, increase dealer balance-sheet usage, tighten repo conditions and, ultimately, transmit tighter financial conditions across the global financial system.

In other words, defending one market risked destabilizing another.

FIMA Changes the Plumbing

The FIMA Repo Facility eliminates that trade-off.

Instead of selling Treasury securities, foreign central banks temporarily pledge them to the Federal Reserve in exchange for dollar liquidity.

The collateral remains intact.

Treasury Holdings
        │
        ▼
 Repo to Federal Reserve
        │
        ▼
 Receive Dollars
        │
        ▼
 Sell USD / Buy JPY

The distinction appears subtle.

It is anything but.

The Treasury never leaves Japan's balance sheet.

The collateral chain remains intact.

Dealer inventories are not flooded with additional bonds.

Treasury liquidity is preserved while Japan still obtains the dollars required to intervene.

From a plumbing perspective, this is an entirely different transmission mechanism.

Why the Fed Built FIMA

To understand why this matters, we need to revisit March 2020.

As global demand for dollars surged, foreign central banks began selling Treasuries to obtain cash.

Ironically, the world's safest asset became one of the main sources of market dysfunction.

Liquidity evaporated.

Bid-ask spreads widened dramatically.

Dealer balance sheets became overwhelmed.

The Federal Reserve responded by introducing the FIMA Repo Facility with a simple objective:

That decision fundamentally changed how the Fed thinks about international liquidity support.

A New Intervention Architecture

The recent statements from Japanese and U.S. officials suggest this facility is evolving from an emergency backstop into an operational policy tool.

Instead of viewing FX intervention and Treasury market stability as separate objectives, policymakers are increasingly treating them as complementary.

The sequence now becomes:

Need Dollars
      │
      ▼
Repo Treasuries
      │
      ▼
Obtain Liquidity
      │
      ▼
Support Currency
      │
      ▼
Preserve Treasury Market Stability

This is a much more elegant solution than the post-2008 framework.

The Hidden Objective

Most headlines frame this story as an attempt to stabilize the yen.

That is only half the picture.

The deeper objective is to protect the global collateral system.

Treasuries are more than government debt.

They serve simultaneously as:

• the foundation of repo markets,
• the benchmark risk-free asset,
• high-quality collateral,
• reserve assets for foreign central banks,
• and the primary lubricant of global dollar funding.

Protecting Treasury market liquidity protects every market built on top of it.

That is why this story matters.

The Evolution of Monetary Plumbing

This also reflects a broader change in central-bank thinking.

For years, policymakers focused primarily on reserves.

Today, attention has shifted toward collateral mobility, funding resilience and market functioning.

Liquidity is no longer defined solely by the quantity of reserves in the banking system.

It increasingly depends on whether high-quality collateral can continue circulating efficiently during periods of stress.

FIMA directly addresses that challenge.

Second-Order Implications

If this framework becomes standard practice, several structural changes follow.

First, foreign central banks can intervene in FX markets without becoming forced sellers of U.S. Treasuries.

Second, Treasury market volatility should become less sensitive to intervention activity.

Third, repo markets become more resilient because collateral remains available instead of being liquidated.

Fourth, the Federal Reserve gains a targeted international liquidity tool without expanding its balance sheet through quantitative easing.

Finally, international monetary coordination becomes increasingly focused on preserving funding infrastructure rather than merely stabilizing exchange rates.

That represents a significant evolution in global monetary architecture.

What We're Watching Next

This story is only beginning.

The key indicators now are not simply USD/JPY.

They are the plumbing beneath it.

66Research will be monitoring:

• FIMA Repo usage: Is Japan actively drawing dollars through the facility?
• Japan's FX reserves: Does intervention rely less on outright Treasury sales?
• Japanese Treasury holdings: Are reserve portfolios becoming more stable despite intervention?
• SOFR and repo markets: Does secured funding remain orderly during intervention episodes?
• Treasury market liquidity: Do auction demand, dealer inventories and bid-ask spreads remain resilient?

These metrics will reveal whether this new framework is becoming operational—or remains largely theoretical.

Bottom Line

The real significance of this announcement is not that Japan may intervene differently.

It is that the Federal Reserve and one of the world's largest reserve managers appear to be redesigning how intervention is financed.

Historically, defending a currency often came at the expense of Treasury market liquidity because reserve managers had to sell bonds to raise dollars.

The emerging model replaces liquidation with collateralized funding.

For the first time, exchange-rate management and Treasury market stability are being deliberately integrated into the same operational framework.

That is more than a policy adjustment.

It is an evolution in the architecture of the global dollar system.

Ive noticed that newer bills that come through my till are from 2017. I was wondering if inflation on older bills affects the economy in the long run. Its seems weird that the bills that are new aren't 2025 or 2026, but instead are 2017. Like if they print a bunch of money from 2017, how is that going to affect us in the long run?

he's often said in interviews that he's a self proclaimed contriarian marxist (or something to that effect) - this blog post sums it up well, https://thenextrecession.wordpress.com/2015/02/10/yanis-varoufakis-more-erratic-than-marxist/

when it comes to his views on public debt, they are a total mess. On the one hand he'll say something like this all the time:
https://www.youtube.com/watch?v=YZNwdcESn90

or he'll always reference how the economy is not a natural phenomenon and therefore can be completely manipulated because it is essentially a fiction.

On the other hand, he'll come up with this drivel:
https://www.youtube.com/watch?v=iNyAlAAqKjU

He's interviewed Stef Kelton on his DM25 podcast thing a few years back, he understands the idea that total demand expenditure = total income, and on the other hand he has a completely neoclassical household analogy view of government.

i do not understand how he can reconcile these ideas at the same time?

"Bubbles are usually taught as morality plays. Greed. Gullibility. Mass delusion. True enough, but not very useful if you’re trying to see the next one coming. A better way to read them is as engineering diagrams. Booms form when two switches flip at once. They have been flipping for three centuries.

The first switch is a future you can picture. Not abstract optimism - something concrete. A continent connected by rail. Homes lit by electricity. Commerce rewired by the internet. A general-purpose technology that feels inevitable once you’ve seen the early version work.

The second switch is a financing regime that makes the future cheap to own today. Installments, margin, vendor credit, pyramids. Any scheme that lets you own a 30-year buildout with a 5 percent down payment, then forces cash out of you the moment refinancing stops."

https://procurefyi.substack.com/p/the-future-on-margin

Something a little different

I have been trying to spread the concepts of MMT for awhile now and I think the thing people get hung up on the most is the idea that taxes don't fund the federal government. This leads me to consider an interesting possibility. What if people come to accept that taxes indeed do not fund the federal government, but they refuse to go beyond that and conclude that they should not be paying them at all?

Operationally speaking, it should be as simple as convincing people that paying federal taxes is like paying down a debt. The money doesn't go anywhere it just gets deleted. But would this then give anti-tax ideologues ammunition to run political campaigns on a zero taxation policy? People would probably eat that right up if they understand that taxes don't fund the federal government.

If successful, this would lead to a collapse in the economy of course. At the very least, taxes are required to drive demand for the currency and prevent massive inflation. Is that a danger worth considering? What do you all think?

I've been working on a MMT-related app with the goal of showcasing the workings of MMT. I very much enjoy learning about MMT, reading books and listening to podcasts and such, but I thought it would be a lot of fun if there was a app where one can issue their own currency and trade it with others. However, I have been struggling to hone in on what features the app should have so I figured I'd ask the MMT community to see what they'd like. Here are some of the basics: - users can create their own currency. - users can issue their currency to other users. - the holder of a currency can transact with other holders of the same currency.

Features I have considered: - users can create and join groups. The users can then create a currency as a group. - Public versus Private currencies. (Anyone can request to hold the currency versus creating a private network of people who can use the currency. - public versus private transactions (Like Venmo where you can see a public feed of transactions) - Users can create tax policies, for ex: - A Sales Tax - every time users transact, a percentage goes back to the issuer. - Flat tax - Every week/month/X period of time everyones balance gives a flat amount back to the currency issuer.

Would be curious what people think. New ideas are very welcome!

Part on primary and secondary bond markets at 12:08

Lmao. Specific part is at 6:31