West’s Seizing of Russian Foreign Reserves May Lead to Rise of Commodities as Money

Some eighteen months ago, I wrote here on “Money as a Social Construct“. Most civilizations over the millennia have found it expeditious to move from simple, immediate barter of physical objects like cows to some system involving “money”. But what is money? Wikipedia gives the following standard definition:

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value.

For convenience, the “thing” used as money is best if it is portable and durable and of limited amount. Gold and silver have historically served these purposes. Even though these are physical objects, their actual value in usage (e.g. how much gold does it take to buy a cow) is arbitrary. Its value in usage is whatever is agreed upon by the users.

For this system of money to work, the key players all have to believe in the value of the gold coins. Thus, money is a mainly social construct, an article of mutual faith. If people lose faith in the value of some form of non-commodity money, it will in fact become valueless.

We have moved from useful commodities like cows, to gold coins and bars, to printed dollar bills redeemable in gold,  and now to fiat currencies not formally tied to any physical objects. And in the twenty-first century, most “money” is not even tangible printed bills, but is in the form of digital entries in accounts “somewhere”.

Trillions of dollars’ worth of transactions take place every year, on the supposition that the dollar you deposit in a major bank will be there next week or next year. At my own personal level, nearly all of my life savings exists in the form of investments in stocks or bonds of corporate entities, which are held in accounts that I only ever access from my computer. Thus, I rely on on-going functional, reasonably honest government to enforce rules on the stewardship of those funds at multiple levels. So I am betting everything on the supposition that law and order prevail.

Well, in war sometimes “law and order” do break down and the normal rules of stewardship are over-ridden. Such has been the case with Russian foreign reserves. The central banks of major nations hold assets in the form of accounts at other central banks. Russia, as a big net exporter, has accumulated reserves of dollars and other currencies at the central banks of various nations in the West. In the wake of Russia’s invasion of Ukraine, the Western banks froze some 630 million of Russian assets held in these banks. There has even been discussion of redeploying these assets to pay for assistance to Ukraine.

(Sadly, as I noted in How Overzealous Green Policies Force Europe to Bankroll Putin’s Military, these seemingly dramatic fund seizures and SWIFT sanctions are annoying but not crippling for Russia. Europe is still funneling billions of euros a month to Russia, because Europe has made itself utterly dependent on Russian natural gas due to prematurely chopping its own nuclear and coal power generation and banning the fracking process that has unlocked such enormous oil and gas production in the U.S.)

It is understandable why the West has taken such a step, in view of the unjustified Russian attack on Ukraine, and the ongoing atrocities such as the bombing of a maternity hospital and a clearly-marked children’s shelter. However, this action may lead to worldwide reappraisals of what is money and how net export nations choose to store their monetary surpluses.

The Wall Street Journal ran a piece called, “If Russian Currency Reserves Aren’t Really Money, the World Is in For a Shock.” It is suggested that central banks may be motivated to accumulate more of their reserves in the form of physical gold, held in their own countries, which cannot be confiscated by some outside forces. Or we may even go back to using “cows” as a store of value, with central banks gaining title to piles of useful commodities such as wheat or nickel or palladium.

Good hockey players skate to where the puck is heading. I bought into a fund of corn futures yesterday. After posting this article, I think I will log into my brokerage account and buy some shares in a fund holding physical gold.

Covid-19 & The Federal Reserve

I remember people talking about Covid-19 in January of 2020. There had been several epidemic scare-claims from major news outlets in the decade prior and those all turned out to be nothing. So, I was not excited about this one. By the end of the month, I saw people making substantiated claims and I started to suspect that my low-information heuristic might not perform well.

People are different. We have different degrees of excitability, different risk tolerances, and different biases. At the start of the pandemic, these differences were on full display between political figures and their parties, and among the state and municipal governments. There were a lot of divergent beliefs about the world. Depending on your news outlet of choice, you probably think that some politicians and bureaucrats acted with either malice or incompetence.

I think that the Federal Reserve did a fine job, however. What follows is an abridged timeline, graph by graph, of how and when the Fed managed monetary policy during the Covid-19 pandemic.

February, 2020: Financial Markets recognize a big problem

The S&P begins its rapid decent on February 20th and would ultimately lose a third of its value by March 23rd.  Financial markets are often easily scared, however. The primary tool that the Fed has is adjusting the number of reserves and the available money supply by purchasing various assets. The Fed didn’t begin buying extra assets of any kind until mid-March. There is a clear response by the 18th, though they may have started making a change by the 11th.  One might argue that they cut the federal funds rate as early as the 4th, but given that there was no change in their balance sheet, this was probably demand driven.

https://fred.stlouisfed.org/graph/?g=JYVL
https://fred.stlouisfed.org/graph/?g=JYVy

March, 2020: The Fed Accommodates quickly and substantially.

In the month following March 9th, the Fed increased M2 by 8.3%. By the week of March 21st, consumer sentiment and mobility was down and economic policy uncertainty began to rise substantially – people freaked out. Although the consumer sentiment weekly indicator was back within the range of normal by the end of April, EPU remained elevated through May of 2020. Additionally, although lending was only slightly down, bank reserves increased 71% from February to April. Much of that was due to Fed asset purchases. But there was also a healthy chunk that was due to consumer spending tanking by 20% over the same period.

https://fred.stlouisfed.org/graph/?g=JYXj
https://fred.stlouisfed.org/graph/?g=JYYz

In the 18 months prior to 2020, M2 had grown at rate of about 0.5% per month. For the almost 18 months following the sudden 8.3% increase, the new growth rate of M2 almost doubled to about 1% per month. The Fed accommodated quite quickly in March.

April, 2020: People are awash with money

Falling consumption caused bank deposit balances to rise by 5.6% between March 11th and April 8th. The first round of stimulus checks were deposited during the weekend of April 11th. That contributed to bank deposits rising by another 6.7% by May 13th.

By the end of March, three weeks after it began increasing M2, the Fed remembered that it really didn’t want another housing crisis. It didn’t want another round of fire sales, bank failures, disintermediation, collapsed lending, and debt deflation. It went from owning $0 in mortgage-backed securities (MBS) on March 25th to owning nearly $1.5 billion worth by the week of April 1st. Nobody’s talking about it, but the Fed kept buying MBS at a constant growth rate through 2021.

May, 2020 – December, 2021: The Fed Prevents Last-Time’s Crisis

Jerome Powell presided over the shortest US recession ever on record. The Fed helped to successfully avoid a housing collapse, disintermediation, and debt deflation – by 2008 standards. The monthly supply of housing collapsed, but it had bottomed out by the end of the summer. By August of 2021, the supply of housing had entirely recovered. The average price of new house sales never fell. Prices in April of 2020 were typical of the year prior, then rose thereafter. A broader measure of success was that total loans did not fall sharply and are nearly back to their pre-pandemic volumes. After 2008, it took six years to again reach the prior peak. A broader measure still, total spending in the US economy is back to the level predicted by the pre-pandemic trend.

The Fed can’t control long-run output. As I’ve written previously, insofar as aggregate demand management is concerned, we are perfectly on track. The problem in the US economy now is real output. The Fed avoided debt deflation, but it can’t control the real responses in production, supply chains, and labor markets that were disrupted by Covid-19 and the associated policy responses.

What was the cost of the Fed’s apparent success? Some have argued that the Fed has lost some of its political insulation and that it unnecessarily and imprudently over-reached into non-monetary areas. Maybe future Fed responses will depend on who is in office or will depend on which group of favored interests need help. Personally, I’m not so worried about political exposure. But I am quite worried about the Fed’s interventions in particular markets, such as MBS, and how/whether they will divest responsibly.

Of course, another cost of the Fed’s policies has been higher inflation. During the 17 months prior to the pandemic, inflation was 0.125% per month. During the pandemic recession, consumer prices dipped and inflation was moderate through November.  But, in the 16 months since April of 2020, consumer prices have grown at a rate of 0.393% per month – more than three times the previous rate. Some of that is catch-up after the brief fall in prices.

Although people are genuinely worried about inflation, they were also worried about if after the 2008 recession and it never came. This time, inflation is actually elevated. But people were complaining about inflation before it was ever perceptible. The compound annual rate of inflation rose to 7% in March of 2021. But it had been almost zero as recent as November, 2020. That March 2021 number is misleading. The actual change in prices from February to March was 0.567%. Something that was priced at $10 in February was then priced at $10.06 in March. Hardly noticeable, were it not for headlines and news feeds.

The Feel of Money

The Federal Reserve System has the ability create virtual dollars with the stroke of a key. They also issue the physical bills of U.S. currency ($1, $1, $2, $5, $10, $20, $50, and $100). The actual manufacturing of the bills for the Fed is done by the federal Bureau of Engraving and Printing.

Wouldn’t it be nice if you could just print up a bunch of $100 notes yourself? Well, the feds have already thought of that, and include an ever-growing array of features to make it hard to duplicate these bills.

Counterfeiting of dollar bills has a long history. Following a distasteful experience of runaway inflation with paper money during the Revolutionary War, the U.S. remained primarily on a gold standard for most of its existence. The first major issuance of paper money was in 1862, to help finance the Civil War. Counterfeiting of these bills soon became a major problem, with up to half the dollars in circulation being phony. A primary mission of the U.S. Secret Service when it was founded in 1865 was to combat counterfeiting.

During World War II, the Nazis in “Operation Bernhard” succeeded in producing enough counterfeit British money that the U.K. had to switch production of banknotes to a different format. The work was carried out by prisoners at concentration camps. Later in the war, the prisoners were tasked with counterfeiting U.S. currency as well. Due to the security features in the dollars, this was a more complex task. Also, the prisoners realized that their chance of being killed was higher after they succeeded in devising a process for making counterfeit dollars, so they slowed the work down as much as they could.  The $100 bill has been a frequent target of more recent counterfeiters, including the British Anatasios Arnaouti  gang and (allegedly) North Korea.

Modern U.S. currency includes numerous feature which make it difficult to duplicate. Only about 1 note in 10,000 in circulation is fake. You can click this link

The Seven Denominations | U.S. Currency Education Program

to zoom in on each of the seven denominations of U.S. currency and see the current security features for each one. The more valuable bills get more sophisticated. The $100 bill has color-shifted numerals and bell image, a 3-D security ribbon with shifting images of bells and 100s, a security thread which glows under ultraviolet light, and subtle watermarks. Magnetic features are also included.

But it turns out that one of the most reliable and hard-to-duplicate features of dollars is the feel in your fingers, a result of the material they are made from and the printing process which gives a 3-D texture:

Perhaps the most difficult-to-duplicate counterfeit deterrence feature of U.S. banknotes is its unique yellow-green paper, manufactured under close security by a single U.S. firm from a mixture of 75 percent cotton and 25 percent flax. When combined with intaglio-printed images and numerals, this gives the notes a unique “feel,” which surveys have reported is the most common method of counterfeit detection by the public and bank employees.

So, if you want your own $100 bills, it looks like you will have to earn them, or wait for the next stimulus check to arrive.

Where Does Money Come From?

Money can be simplistically defined as “A medium that can be exchanged for goods and services and is used as a measure of their values on the market, and/or a liquifiable asset which can readily be converted to the medium of exchange”.  Earlier we described the amounts of various classes of “money” in the U.S.      Here is a chart showing the amount of currency in circulation (coins and bills; lowest line on the chart) for 2005-2020, and also M1 (green), M2 (upper curve, purple) and “monetary base” (currency plus reserves at the Fed; red line).

To recap what M1 and M2 are:

M1: Physical currency circulating outside of the Fed and private banking system, plus the amount of demand deposits, travelers’ checks and other checkable deposits. This is highly “liquid” money, i.e. accepted and used for transactions in the private economy.

M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).

 The funds in these additional savings and money market accounts can in general be easily transferred to checkable accounts, and thus could go towards making purchases if desired.

Physical currency is made and put into circulation by the government or quasi-governmental agencies (the Treasury mints coins, and the Federal Reserve prints bills). But what about all the other money (M1, M2, etc.), which dwarfs the physical currency? How does it grow?

Without getting into all the weeds, it turns out that the major driver of money creation in modern economies is the process of bank loans.  The vast majority of money in countries like the U.S. is not created directly by government or central bank operations, but is created in the private sector when commercial banks make loans.   When individuals or companies decide to take out more loans (including loans for cars, houses, or business investment), the effective money supply in the nation increases. This is true for other modern economies. For instance, the Bank of England states:

There are three types of money in the UK economy:

3% Notes and coins

18% Reserves

79% Bank deposits

A typical scenario of how bank lending increases money might go something like this: Fred would like to add an enclosed back porch to his house, but doesn’t have the money in hand to pay a carpenter to build it for him. So the base case is no payment to the carpenter and no porch for Fred. However, Fred realizes he can go the bank and get a loan to pay for the porch. So he obtains a $20,000 loan from the bank, which first shows up as a $20,000 credit to Fred’s checking account. The bank credits Fred’s account, and in exchange obtains a contract from Fred promising that Fred will pay it back, with interest.

Fred writes a check for $20,000 to the carpenter, who in turn pays $10,000 to a lumberyard for materials and keeps the other $10,000 as his fee. The lumberyard is able to pay its workers for that day, and order replacement lumber from a mill. The workers spent their pay on various items.  The carpenter puts $5000 of his $10,000 fee in a savings account, and pays the rest to a car dealer for a used car.

The initial loan to Fred set off a chain of spending and economic activity, which would not have otherwise occurred. Fred has his porch, the lumberyard workers continue to be employed and supporting their local merchants, the carpenter gets a second car, and this money keeps ricocheting around until it gets drained away into stagnant savings, or is used to pay down prior debt. Although they are not aware of it, part of the lumberyard workers’ pay for that day came out of the debt incurred by Fred.

The granting of that loan created $20,000 of spending capability, i.e. money.  As far as the economy is concerned, that $20,000 did not exist as effective money prior to the loan. Thus, the money came into existence simultaneously with the debt associated with the loan. Fred received the capacity to spend $20,000 today, but in turn accepted the obligation to pay back this money, with interest. It is assumed that Fred had a stable income, such that he would in fact be able to pay back the loan in the future.

In general, increasing debt increases the money supply, and paying down debt extinguishes money. For simplicity, suppose Fred repays the $20,000 loan (with $2000 interest added) in one big lump, two years later. In that year, he will presumably spend into the economy something like $22,000 less than he would have otherwise. Thus, his paying down of his debt will act as a decrease in the circulating money.

In normal times, as one person is paying down his loan (and thereby shrinking the money supply), someone else is taking out a new and even larger loan, so total debt and the amount of money in circulation stays about the same, or grows somewhat. A feature of the 2008-2009 recession, however, was a big drop in consumer demand for credit; folks decided to pay down debts and not borrow so much money to buy stuff. The effect was a big drop in spending and thus in overall economic activity (GDP) and in employment.

Where was that $20,000 before Fred borrowed it? We might think that it was sitting unused in the bank vaults, just waiting to be borrowed. That turns out to be an incorrect picture of the lending process.

Bank loans differ in key ways from, say, an interpersonal loan. If I lend you money, I might draw down my checking deposit and give you a check which you would deposit in your bank account. No new money is created. You may hand me an I.O.U. slip stating when you will pay me back and with what interest, but that would still be just the same funds being traded back and forth between the two of us. I would have to have the money in my account to start with before I could loan it to you.

Bank lending is different. A bank can lend money and hence create a new deposit, which amounts to brand-new money, even if the bank does not have that money to start with.  This is counterintuitive. In a later post we may flesh out this seemingly magical aspect of bank lending. See  Overview of the U. S. Monetary System for a more complete discussion.

How Much Money Is There?

It is not straightforward to define what “money” is in a modern national economy. Simply tallying the amount of coins and paper currency is inadequate. Most buying and selling is now done by shifting numbers between abstract bank accounts, not by pushing a bundle of bills across a table.  Thus, these bank accounts serve the functions of money (medium of exchange and store of value). The question then arises as to which of these financial accounts to regard as money.

Among financial assets, there is a broad spectrum of liquidity. Typically you can write a check on your checking account which, when it clears, provides immediate and final settlement for a purchase.  On the other hand, if you want to tap your brokerage account with its holdings of Apple stock to buy a television, you would typically have to sell (liquidate) your stock. A third party would have to be willing to give you something more money-like (e.g. credit your money market fund at your brokerage) in exchange for the stock at some negotiated price. Then you might have to transfer the funds from your brokerage fund into your bank checking account before you can actually buy that TV.  Because of all these intermediate steps, and the fluctuating value of the stock before you complete the sale, the stock holding would not be counted as “money”, even though its value enabled you to ultimately make your purchase.

There are a number of measures of money in modern economies. In the U.S. some of these are:

M0: The total of all physical currency (coins and paper bills).

MB (“Monetary Base”): The total of all physical currency (coins and bill) plus Federal Reserve  Deposits (special deposits that only banks can have at the Fed). This is money essentially created by the government plus the Federal Reserve, which does not necessarily enter the private economy to be spent.

M1: Physical currency circulating outside of the Fed and private banking system, plus the amount of demand deposits, travelers’ checks and other checkable deposits. This is highly “liquid” money, i.e. accepted and used for transactions in the private economy.

M2: M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000). The funds in these additional savings and money market accounts can in general be easily transferred to checkable accounts, and thus could go towards making purchases if desired.

MZM: “Money Zero Maturity” is one of the most popular aggregates in use by the Fed because its velocity has historically been the most accurate predictor of inflation. It is M2 – time deposits + institutional money market funds.

Below is a chart showing the growth in the U.S. in the past fifteen years of M0 (total currency, labeled “currency in circulation), MB, M1, and M2. The grayed areas are recessions, i.e. 2008-2009 and the present.  [1]

Various Measures of “Money” in the U.S.

The M1 money supply (green line) was about $1.4 trillion ( $1,400 billion on the chart) in 2005, was fairly steady for several years, then started a steady ramp up to $4 trillion by January, 2020. Due to the extraordinary events associated with the Covid-19 shutdown (government stimulus package plus Fed purchases of securities), M1 jumped up to $ 5.4 trillion by August of this year. M2 followed similar trends, though on a much larger scale, rising to$18.3 trillion this year. This compares to a current U. S. total GDP of about $21 trillion.

The lowest line on the chart is the physical currency (blue line), which has grown slowly but steadily. The “Total MB” (red) line, was essentially on top of the blue line up until the 2008-2009 recession. Since MB = physical currency plus reserves, this meant that the amount of money in the reserve balances at the Fed of the private banks was nearly zero before 2008. The reserves jumped up (difference between the red and blue lines) in 2009, with the onset of massive purchases of securities by the Fed (“quantitative easing”). The Fed buys these securities from the banks, and credits their reserve accounts. The Fed has tried to taper down its holdings in recent years (red line declining 2015-2019), but suddenly purchased trillions more this spring (red line jumping up in 2020).  Most pundits hold that all this Fed money injected into the financial system has been the major cause of the enormous rise in stock prices in the past decade, especially in the past six months.

[1] Chart produced on the St. Louis Fed “FRED” site, https://fred.stlouisfed.org/categories/24 . This site has a wealth of economic data. Unfortunately, it is not easy to change units, so I was stuck with “billions” instead of “trillions” for the axis labels. Also, the M0 and MB numbers were only available in “millions”, so I had to divide those numbers by 1000 to get them to fit on the plot with M1 and M2. The grayed out spots on the graph labels is where I blotted out the “ /1000 ” which the plotting software put in. It would have been cleaner, in retrospect, to have exported the data to Excel and replotted it there.

Money as a Social Construct

Wikipedia offers the following definition of “money”:

Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value.

To illustrate why all advanced societies use money, let us consider a village which operates on a barter system. (Many primitive cultures probably operated on a basis of mutual gifting rather than strict barter, but that does not affect the point at hand). Suppose the baker has produced two loaves of bread that will go stale in a day, so they would be best sold today. The baker would like a pair of sandals from the cobbler. They agree this is a fair trade, but the cobbler is backed up and will not be able to make the sandals for a couple of days. Thus, they cannot immediately make a swap. For this mutually advantageous transaction to proceed, the cobbler must agree to the obligation to deliver something (namely, a pair of sandals) in the future, in return for the loaves of bread today. The baker must believe that the cobbler will deliver on his promise.

Here we see the importance of credit and debt, which depend on mutual trust, to enable transactions where there is a time lag between the actions of the two parties. The cobbler’s promise may just be a verbal agreement, but now suppose the cobbler writes down on a piece of paper, “The holder of this certificate is entitled to one pair of sandals from me, the village cobbler,” and gives this to the baker. Now this piece of paper is nearly the equivalent of a pair of sandals in value. It has become a store of value. If the baker later decided that he would rather have some candles instead of the sandals, he might be able to exchange this certificate for the candles. Thus, this piece of paper, which started as a statement of a debt between two individuals, would serve the function of money. (In fact, such “bills of exchange” issued by merchants were an important form of money in late medieval Europe).

It would be even cleaner if the baker could simply sell the bread to the cobbler for something that functioned in that village as “money”, such as silver coins. The baker could then use some of the coins to either buy shoes or buy something else, either now or later.  In this case, the coins operate as a convenient medium of exchange and also as a store of value. Both functions enormously aid financial transactions, which is a reason that money is so ubiquitous. Money also facilitates taxation by central governments, so governments have an incentive to put a monetary system in place.

In Money We Trust

For this system of money to work, the key players all have to believe in the value of the silver coins. Thus, money is a mainly social construct, an article of mutual faith.

With the rise of banking in the Renaissance, banks issued paper certificates which were exchangeable for gold. For daily transactions, the public found it more convenient to handle these bank notes than the gold pieces themselves, and so these notes were used as money. People generally trusted that the banks actually did have the gold in their vaults; if people lost confidence in the bank notes, they would all come at once to demand their gold in a “run” on the bank, which usually did not end well.

In the late nineteenth and early twentieth centuries, leading paper currencies like the British pound and the U.S. dollar were theoretically backed by gold; one could turn in a dollar and convert it to the precious metal. Most countries dropped the convertibility to gold during the Great Depression of the 1930’s, so their currencies became entirely “fiat” money, not tied to any physical commodity. For the U.S. dollar, there was limited convertibility to gold after World War II as part of the Bretton Woods system of international currencies, but even that convertibility ended in 1971.

Many older Americans and Europeans have a gut feeling that gold is “real” money. Its main advantage over fiat currencies is that there is only a limited world-wide amount of it, so it cannot be multiplied at the whim of some government or market force. However, even gold is just a shiny yellow metal whose value is whatever people believe it to be.

Money and Social Order

There are “preppers” who hoard gold coins, expecting that in the apocalypse they will be able to purchase goods with gold. But who knows how many gold coins it would take, in such a scenario, to buy a can of beans? Or if you show up in town flaunting gold coins, how long before the local warlord’s gang comes calling at your doomstead? I suspect in such a scenario society would revert back to using “commodity money”, using items with real alternative value, such as AA batteries, food items, or ammo.  In the 1700’s frontier, beaver pelts, which had intrinsic value, were used as a common denominator for pricing and exchange.

If people lose faith in the value of some form of non-commodity money, it will in fact become valueless. For instance, during the American Civil War of 1861-1865 both the North and the South issued paper currency to fund their military efforts, since neither side had enough gold to pay their soldiers and suppliers of military goods. These were both fiat currencies, not at the time redeemable in gold.  The North retained its government and a strong economy, and only a portion of its money stock was paper, so it experienced only moderate inflation. However, towards the end of the war, with excessive printing and with defeat of the Southern Confederacy in sight, the Confederate dollar lost nearly all its value. People no longer wanted to accept Confederate dollars in exchange for real goods, since they (rightly) feared that they would be unable to exchange the “greybacks” for the same amount of real goods in the future.

As long as a given government remains in power and does not issue crazy amounts of money (as in post WWI Germany or recent Zimbabwe), or some catastrophe does not strike, fiat currencies tend to remain in use. The value of fiat money derives in part from a government declaring that it must be accepted as a form of payment (“legal tender”) within that country, for “all debts, public and private”. The government typically requires that its citizens come up with some amount of its currency to pay their taxes, so that automatically creates some level of domestic demand for the currency.

Today, most “money” is not even tangible printed bills, but is in the form of digital entries in accounts “somewhere”. Nearly all of my life savings exists in the form of investments in stocks or bonds of corporate entities, which are held in accounts that I only ever access from my computer. I rely on on-going functional, reasonably honest government to enforce rules on the stewardship of those funds at multiple levels. So I am betting everything on the supposition that law and order prevail.