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It's two numbers in computers. It's a number in the computer of the bank that issued the money, and it's a corresponding number in the computer of whoever is holding that money as an asset.

> Otherwise some Russian bank could just increase that number to whatever they like. And say "Look, we own 100 Trillion USD. Now let's go shopping."

It's not possible for a Russian bank to pretend they're holding more USD assets than they really are. The issuing bank knows how much USD is in Russian bank's deposit account. The Russian bank can issue its own USD liabilities (i.e. deposits) which are IOUs for the USD reserves that the bank holds on the asset side of its balance sheet. If the bank issues too many USD liabilities, they risk suffering a bank run that drains their USD reserves and puts them out of business.

> So I guess USD needs to be recognized by the US somehow?

Not exactly. It's possible to have a USD-denominated deposit account at a bank that h deposits at banks in the US. Most of the USD-denominated instruments in the world are not directly recognized by the US. But the international monetary system is hierarchical. Every USD instrument is an IOU for another USD instrument. If you follow the chain of IOUs, eventually, you'll get to the Fed.

This is a comment that's not related to SWIFT in particular.

Every asset (including money) is generally someone else's liability. The money that we hold as an asset is the liability of a bank. Anyone can issue their own liabilities, but you can't create money that's a liability of someone else. For example, I can't go to my bank and tell them I have a million dollars more in my deposit account than I actually do. They're keeping track on their end.

Similarly, a bank can't pretend that it has more reserve deposits at the Fed than it really does. The Fed keeps track of everybody's reserve accounts on their end.

> Furthermore, does the system guarantee that the central banks of each country are correctly adjusting their books in consequence?

This isn't an issue. The books of central banks don't need to adjust when other banks issue money (i.e deposits).

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No they're not. Let's say B's non-carry bits are all 1. If you carry anything from C, that will affect B's carry bits.

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Unlikely. You can't mate with copies of yourself unless there are already multiple copies of yourself floating around.

I like the story they present in the article. For simple organisms, it's fairly inexpensive to let defective individuals die off. As organisms get more complex, it starts to become more costly to allow defects in the genetic code to persist. Then it becomes worthwhile to perform "integrity checks" to correct errors in the data as it's being copied.

If a population of organism is put into an environment conducive to a lot of data corruption, then the ones who are want to perform these checks are the ones who end up surviving.

You could imagine that when higher complexity organisms are exposed to high-stress environments, it would help establish their population's ability to sexually reproduce. The ones who aren't doing it will tend to die off.

Then as the complexity increases further, the genetic complexity itself can be a permanent endogenous source of high stress. The organism then loses the ability to produce asexually because it's no longer needed.

Sexual reproduction promotes genetic complexity because it allows us to survive while having more complicated genes. The recombination and mixing-and-matching only helps further the process along.

They're related. There's both fiscal stimulus and monetary stimulus going on here. The monetary stimulus only makes its way to consumers indirectly. On the fiscal side, as you say, Treasury can spend money on whatever they want. And when they do, they transform some of the financial sector's money into assets (treasuries). If the Fed wants to maintain its accommodative monetary policy, they're going to want to re-monetize those assets.

> your statement that our economy has the capacity to provide a decent standard of living to everyone is an article of faith

"decent standard of living" was not crucial to my point.

There's some part of our economy's productive capacity that we have consciously decided not to shut down because we've deemed "essential" to consumers. My point is that it would be a mistake for us not to provide consumers with the means (money) to access that capacity.

When the Fed expands their balance sheet, what they're doing is replacing private-sector assets with liquid cash. Given that the stimulus is appropriate for the economy, this is all fine. It's not anything that future generations have to "pay back." And it's not going to cause a collapse of the dollar.

The important thing to keep in mind is that we are intentionally shutting down parts of the economy. But some of those parts include mechanisms (jobs) that we normally rely on to supply spending money to consumers and businesses.

Due to the partial shutdown, the economy's productive capacity has taken a hit. But even so, our economy still has the capacity to provide a decent standard of living for everyone. We don't want to compound the crisis by failing to ensure that consumers have sufficient spending power to activate the remaining capacity.

It would be scary if the Fed's balance sheet weren't expanding like this right now.

http://www.greshm.org/blog/printing-money-cures-the-covid-19...

http://bit.ly/intro-to-cmt

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