well, there's a demand, there's certainly a demand

because the dollar is the world reserve currency.

There's a demand by people to have deposits

in dollars who aren't in the United States.

It's very common that traders in, in, I

dunno, Japan and, and, Argentina, you know, might be.

Invoicing all their trade and actually making

all payments in dollars, even though neither one

of have has any offices in the United States, okay?

Well, that's that's a reason.

Now you could be doing this all through a bank in New York.

Through accounts in, in City New York, okay?

But the Fed doesn't kind of want you to do that, okay?

It, it would prefer, in fact, that you do this offshore.

It wants to focus on control of domestic credit, okay?

So there's this separate world outside

in the, in the international dollar reserve world, okay?

Where people are using the dollar in order to make payments.

Now, I've emphasized, several times now, for two weeks, that once you're

talking about a payment system, you're talking about a credit system, okay?

That the way, in order to create a flu, an elastic payment

system, it has to be so that people who are running deficits

have some way.

Or borrowing from people who are running surpluses

under that's there's a credit element to that, okay?

So it's not just that every one wants to have deposits, okay?

In order to make payments to each other, they also want to have loans, okay?

They also want to be able to borrow and lend.

And from the point of view of

Credit Leyonnaise they actually want matched book.

They want the,

these things to be equal so they don't have any currency exposure because they

do all of their profit calculation in Francs or I guess Euro's today, okay?

And so, they would like to have to have a balanced book.

That there's as many dollar assets as there are dollar, dollar liabilities.

The euro dollar market grows up initially because there were

credit controls, capital controls, controls

of international flows of capital.

As, after world war two, enlarged corporation said, you know, that

might be fine for my pa but its not fine for me.

And so, they, they did business with each other in London, okay?

Which is where the euro-dollar market sort of has its center, instead of in New York.

And it was a way of

evading some of the capital controls that are happening in the United States.

And the United States let them and in fact encouraged them to, to, to do that.

But eventually, those capital controls all broke down and

the market continued to thrive, and Bretton Woods broke down.

and your dollar market grew to be larger than the fed funds market, okay?

by, by an order of magnitude, very large.

There's a lot of trade in the Euro dollar,

in the Euro dollar market.

So much so, that before the crisis, there was some

thought that, which is the tail and which is the dog.

You know, is the fed funds market the market for dollars?

Okay?

Or is the or is the Euro dollar market, the market for dollars?

And you couldn't tell.

And you couldn't tell because, you know, they traded the same rate.

They traded the same rate.

The crisis revealed, okay? There's a big difference.

Big difference, okay?

The fed funds market is like the real market.

These are real dollars, okay? These are connected to the fed.

And the euro dollar market is a credit extension of that, okay?

In terms of the hierarchy the euro dollar is market is below the fed funds market.

The fed funds market is trading in the reserves of the of, of the fed.

So nobody has any questions about that, anymore?

I don't think so But there were plenty of people and I was one

of them actually before the crisis who saw the volume in the Eurodollar market.

And I talked to the people in the New York

Fed and they're worried about controlling the fed funds rate, right?

For domestic purposes and so they see the Eurodollar

rate and they're like, you know, everyone they're dealing with

You know can, they big banks can all borrow

either in the franc-dollar market or in the euro-dollar market.

So, and you can't control, you can't control market.

So they are worried about losing control.

Well, they got control.

They got control back in the crisis, okay?

Because nobody want the euro-dollar market phrase up.

And the fed fund, funds market didn't. Okay.

Because the fed supported the feds fund market.

And everyone remembers that now.