Hello, fellow rebel capitalists hope you're live.

Hope you're well. I'm live.

I get my words mixed up here.

My good buddy Jeff Snyder.

Jeff, we were just talking about the Federal Reserve.

And the other day I called you actually from the Bahamas

because I was going over a presentation on what I thought was pretty obvious that the

Fed didn't really control interest rates or at least they didn't

control liquidity through bank reserves from 1980 to 2007 and I always focus on that

time frame because the amount of reserves held at the Fed was the same.

It fluctuated a little bit, but if you look at 1980, it was right around 40 billion, and then in in 2007 it was also 40 billion. So my initial

thought there was how on earth are you managing the Fed funds rate if it's through open market operations because the story or what you read in the

textbooks is if the Fed wants the interest rates to go down well they'll just add a few more reserves in there right because then there's more

reserves so the interest rate goes down or if they want the interest rates to go up

when they take some reserves out of the system and this was prior to QE I always thought that's the way it worked on like how are they bringing interest rates from 15% down to 5% from 1980 to 2007 if the reserves stay the same.

And then you told me, well, they don't really do that.

They just kind of say, hey, please, banks, make interest rates, the overnight rate

at 5% or whatever the Fed wants, but then I got to thinking

and I'm like, okay, well if that's true, if bank reserve, if there are demand, there is demand for

bank reserves, then how would the level of bank reserves not fluctuate at all, at all when

M2 goes from 1.5 to 7.5 trillion and interest rates go from 15 to 5.

If there's demand for these bank reserves, if the banks are actually using them,

...