E Fed And Trump Fail The Eurodollar Market

The Eurodollar market is a huge offshore money market that also operates in NYC through international banks. This market uses American dollars deposited offshore (Eurodollars) and has, over time, exposed the Fed as a big failure. It turns out that the Eurodollar market has revealed its disappointment over the years with QE and with the Fed. It has shown that QE is not really money printing. First, an explanation of the Eurodollar market is helpful:

One of the biggest reasons the eurodollar market is popular is that eurodollar deposits are not subject to American banking regulations. Because the deposits are outside of the United States, the banks holding these deposits do not have to adhere to the Federal Reserve's reserve requirements, and the Securities and Exchange Commission does not regulate eurodollar securities.
 
Many banks and corporations find the lack of regulation attractive because it lowers costs, increases flexibility, and allows for creative structuring of financial instruments. 

The Eurodollar Market is an interest rate market, not a currency market. It gives a good idea about where world prosperity is heading. Eurodollar loans don't create broad money. The Eurodollar, sort of a private base money is actually loaned out, unlike excess reserves, which are not. 

The Eurodollar futures market was started in 1981 at the CME.  As it turns out, the Eurodollar Market, the largest liquid market in the world, is primarily centered in London, because its markets operate during the American and Asian markets. Major America banks have their foreign subsidiaries located in London. 

In attempting to understand the Great Recession crash of 2008 and the continuing lack of recovery, insights provided by Jeffrey P. Snider, who also contributes to Talkmarkets, are worth viewing. Mr. Snider takes us through the history of Eurodollar futures behavior during this time of recession and New Normal, ie, lack of recovery of the real economy while financialization takes over:

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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