The TRUTH about the fed pivot. It's NOT what you're being told.

I'll save you he's trying to sell the lie the banks are not getting bailed out and the fed giving them billions isn't inflationary...

Op is obviously a shill.

you're a fucking moron that doesn't know what the fuck you are babbling about. All QE is not deflationary. moran.

you ignorant dumb ass nobody takes out a 300K loan so he can pay back 600K.

he takes it out to put it work and can pay back the 600K because he has created PRODUCTIVITY that produces a good or a service that is worth the principle + time value of money + his profit.

So QE is deflationary ONLY IF THE MONEY CREATED IS DIRECTED TO A PURPOSE TO CREATES A GOOD OR A SERVICE THAT OFFSETS THE MONEY LOANED + THE TIME VALUE OF MONEY.

Which is the exact opposite of what has happened since 2019. The Government is spending money, producing nothing of value with it and thus creating inflation as the added dollars are not offset by added goods.

you don't know what you are talking about.

I'm not sure I understand that analogy. I wouldn't characterize making collateralized loans as punching the accelerator. More like throwing excess weight overboard.

Actually I think a good analogy would be a plane dumping fuel to gain altitude, knowing that it needs that fuel to reach its destination. The dumping of the fuel is essential to delaying the inevitable crash, but makes it all the more inevitable.

If the goal is to move everyone to a CBDC system with limits on what they can hold, jf the FED is the one making existing money supplies disappear through this process, and since the big wigs likely won't be limited in THEIR saving power is it possible that they aren't just shrinking the money supply but actually pulling a magic trick to redirect those funds to their own CBDC accounts for when it goes live?

Summary:


There are rumors on social media about the Federal Reserve's pivot, but they are greatly exaggerated. The Fed's balance sheet can grow in two opposite ways: through open market operations or collateralized loans. While some people are predicting that the Fed has pivoted and is about to embark on quantitative easing, the Fed is actually tightening its balance sheet, and the data does not support this claim. Reserve deposits show that the money is going out almost as fast as it's going in, meaning the banks are not being bailed out. QE is not possible right now, and it would likely be deflationary in the short term if implemented.


Now, if this is true, you realise, it's >>game over<<, right?

A CBDC backed on debt is useless. Well, I mean you can use it, may have to, but it is just fiat with a digital wrapper around it.

My 82 year old father said, "Why do we need a CBDC, I pay most everything digitally anyway."?

And yes, printed currency will stay around, at least for a while.



This all said. These CBDC's all sound useless.

UNLESS - Unless a powerful nation, like the USA, actually backs their Central Bank Digital Currency with BitCoin and precious metals. (or only BitCoin)

Read Softwar by Jason Lowery.

Not sure he recommends what I did above. BUT, he does recommend that the US back BotCoin and mine the heck out of it and ASAP. Otherwise, some other nation WILL.

My thesis is one sentence:
The first major nation to back their CBDC with BitCoin, wins!

https://twitter.com/_/status/1627640858106380290

Fed is punching the accelerator and slamming the brakes at the same time. Breakdown imminent.

So what preventing them printing more $ out of thin air?

More in line with raising interest rates while also providing liquidity via bank bailouts or covert market purchases. PPT was obviously working it Friday.

Waiting for the 4 trillion dollar reload into equities market.

Probably two more years to go.

What is the core difference between us and Zimbabwe or Venezuela or The Weimar Republic that prevent us from experiencing hyperinflation?

I strongly, strongly disbelieve that the fed has any control over rates. I think rates are determined by demand for bonds, which is really a function of the average consumer's demand for credit, and ability to take on that credit.

And as I stated many times, there are no bailouts. The banks are merely leveraging assets they own to borrow money to cover depositor withdrawals.

Waiting for the 4 trillion dollar reload into equities market.

Probably two more years to go.

The fed can't actually print money.

That's a matter of intense debate. Read this paper by Rogoff and Reinhardt. [link to en.wikipedia.org (secure)]

The mechanism is not fully understood, but the facts seem to support their assertion.

3rd way: it can do whatever the fuck it wants cos its above the law and answerable to no one or nothing.

lmao!!!!!


I worked in the banking system for decades as a high-risk assessment agent for most of the major banks worldwide. I still have all my agent numbers too.


When I first came on in the 90's I was given a book to read as I moved up in the chain. It's called "Creature from Jekyll Island" by Edward G. Griffin. I'd suggest reading it, or watching his video presentation. TPTB don't hide their Fiat power.


Here's a perfect example too. [link to www.youtube.com (secure)]

That would only solve the problem if there were a huge international demand for our products like in WWI and WWII. If other countries either didn't have the money or capital to purchase weapons from us, or if we needed all of them ourselves, the problem would be the same, that the government couldn't maintain the debt service.

It's commonly believed that war always equals profit, but the US was in a very unique position in the first half of the 20th century. Technology had globalized the economy enough that we could provide timely exports to Europe, but not to the point where invasion of the mainland US was a viable possibility.

I.e. ships carrying cargo could make the passage in a week or two, but enemy missiles and bombers didn't have nearly enough range to come close to us. The Japanese tried island hopping to Alaska, but it didn't work because the conditions were too extreme that far north.

So we had this endless demand for our output, and the natural resources to make it happen, but were untouchable by the destruction that wrecked the rest of the entire world.

And we got to do that twice, where we incurred no losses, relatively speaking, but got to reap unbelievable benefits. That wasn't the norm before, and in the age of hypersonic missiles our remoteness no longer protects us.

So the idea that a war will save us from our debt is probably very hopeful at best.

That certainly doesn't mean there won't be a war though. The collapse of the dollar supply is what's causing geopolitical turmoil right now, and will ultimately likely lead to all out global war. But also famines, depressions, and revolutions. The dedollarization of the world is going to be the shitstorm of the ages.

When I start to read about economics my brain tried to shut down.

I don't understand this-- in a land like the US that can feed its own population and have a large surplus of food- if the population stays small-moderate, and with so many natural resources, why can't we just deal with each other and what little we need in way of other foods/resources- we could just barter with what we have surpluses of?

Did it ever occur to you that they're lying?

Money printer broken, fed no can go brrrr, economy much sad.

Now say it in one sentence

Did it ever occur to you that you are naive and don't know wtf you're talking about?


You've been indoctrinated since birth, you've never seen the entire picture because you haven't worked in the system at a high level. Intelligent people that are not willfully ignorant can typically figure it out themselves, there are plenty on GLP that fit that mold.


Most of what you know is from books, or learned from clown professors, or low-level people in the banking system. All of them are pawns in the game.


Critical thinking is only good if you understand the whole book, not just chapter 1,6,8, then you have to understand who wrote the book and their MO too.


Keep digging in, but stop lying to yourself.

I wanted to wait for some more data to come in before making this, but it suffices to say that rumors of the fed pivot on social media are greatly exaggerated.

Charts of the fed's balance sheet have been circulating that look something like this, and people have been proclaiming the return of QE and monetary inflation.

[imgur] [link to imgur.com (secure)]

People are predicting that the fed has already pivoted and that the money supply is about to explode again like it did in 2020. Maaaaaybe, but maybe not! Or maybe even probably not.

There's a fundamental misunderstanding when it comes to the fed's balance sheet. The fed's balance sheet can grow in two different, and opposite, ways. One way is the fed conducting open market operations (e.g. QE), where it buys securities (e.g. mortgage back securities and treasury bonds) directly from the secondary market. The other way is the fed merely makes collateralized loans against securities held by banks. That's done with a "repurchase agreement" through the fed's "discount window."

The difference is this. If someone takes out a home equity line of credit, that's analogous to a repurchase agreement, aka "repo." But if the bank were to outright buy a house from someone, that's analogous to open market operations.

This is a chart of the fed's balance sheet, including only securities that they own outright:

[imgur] [link to imgur.com (secure)]

As you can see, the fed is STILL tightening its balance sheet. That is QT is still in full swing. And obviously this paints a very different picture than the assumption that we're living through a repeat of 2019.

These two types of fed intervention have vastly different implications. Open market operations where the fed buys treasuries outright creates increased demand for government bonds, which can hypothetically bring rates down and expand the money supply. For example, if the primary dealers are selling bonds for a profit on the secondary market, and the fed is paying market prices, then that will almost certainly increase demand. Not only are the banks incentivized to buy more treasuries, the resulting drop in rates will incentivize the government to spend more. This is due to the fact that falling rates increase the value of bonds, meaning the fed will turn a profit on those bonds, which must be remitted back to the treasury. Effectively meaning that the taxpayers are able to borrow money at negative interest rates. Not only is the treasury not paying interest, they're actually getting more money back from the fed than they paid out. That's been the bond market for last 15 years. As long as interest rates are moving down, the money supply can increase for as long as there's demand for credit.

Repo, on the other hand, means that the banks are losing money on the bonds. Repo is something banks only use when they're hard up for cash. And that cash comes at a cost. They call it the "discount" window because the interest rates are higher than market, resulting in a so-called discount for the fed. It's set up that way to provide liquidity to banks that desperately need it, but at the same time to incentivise them to use the overnight market whenever possible.

So this is a very different dynamic. Rates are increasing, making the bonds worth less, and also shrinking the money supply, and deposits. Money can shrink in the same way it's created, just in reverse. That is, loans expand the money supply, but the money supply contracts when those loans are paid off, unless new loans are created at the same rate the old loans are rolling off. That forces the banks to sell treasuries to cover the withdrawals, and if there are unrealized losses due to rate increases then it can destroy them, just as it did SVB.

Now the aforementioned data I said I wanted to wait for before commenting is reserve deposits:

[imgur] [link to imgur.com (secure)]

That's the money held by banks at the federal reserve. It's analogous to your checking account, but for a bank. Banks have checking accounts at the fed, basically, where they store their reserves.

In the last week or so, the fed's balance sheet has increased about 350 billion due to their overnight lending. The bank reserves have only increased about 250 billion. So the money is going out of the reserve accounts almost as fast as it's going in. In other words, the banks aren't being bailed out. They're leveraging assets to meet depositor demands, and in the long run will be worse off for it. They're losing the interest payments on the bonds, plus having to pay 4.75% interest to the fed. So effectively they're having to pay 8-10% interest to the fed in order to borrow this money to cover customer deposits. And of course the fed is insolvent still, so that money simply vanishes into a black hole, further shrinking the money supply.

So inconclusion, this isn't QE, it's the opposite of QE, and QE is probably functionally impossible right now. While there's nothing legally preventing the fed from buying bonds on the open market if they wanted to, the implications would be deflationary in the short term. QE is always deflationary in the long term (we're dealing right now with the long term consequences of QE done 15 years ago), but QE in this environment would probably be almost immediately deflationary. Because while it would initially stimulate borrowing, it would immediately start pulling more money from the circulating money supply in the form of taxes, and throwing it into the fed's giant black hole of insolvency. That is, the treasury would borrow say 100 dollars for a 1 month bill, and then have to immediately give back the 100 plus five bucks interest, which would vanish from the money supply. So the faster new money is created the faster the circulating money supply shrinks under those circumstances.

I hope this also gives you some insight into the debt ceiling crisis. This is the part the media isn't telling you. The government has gotten used to borrowing money at effectively negative interest rates over the last 15 years, and now they're having to actually service their debt. That means not only are they having to use taxes to replace the remittances from the fed they're used to getting, they're having to use tax revenues to pay the interest. So the cost to borrow money for the taxpayer has gone up tremendously in the past few months. And that's a massive problem for the government seeing as how tax revenues are going down in real terms. I.e. everything the government spends money on in the course of its operations has increased in price, but tax revenues aren't keeping up with the increased cost. E.g. increased medical cost for Medicare, increased cost of living for those on social security, higher government worker salaries, etc.

Yes, the government could increase taxes, but not without dire consequences that would be effectively killing the golden goose as it were. They would merely be increasing the rate at which the money supply is shrinking, AND accelerating the damage to the economy, creating job loss and lost economic opportunity, which would just result in even less tax revenue than they would have had, had they not raised the taxes. Ergo, raising taxes to fund a higher deficit would have almost immediate devastating consequences.

So yes I know the debt ceiling is a political football that's gotten kicked around a lot lately, but things really are different now, and the situation really is dire. If rates don't come down the the money supply doesn't begin expanding soon, I think there's a very real chance the government could actually default.