A subscriber asked my thoughts on this article at Zero Hedge.
The Fed Has Monetized All Treasury Issuance In 2020
From the article…
“We are ruined if we do not overrule the principles that the more we owe, the more prosperous we shall be” – Thomas Jefferson
There is no more subversive entity in the US, more destructive, more inflammatory yet out of the spotlight of public outrage, than the Federal Reserve: it is the Fed’s actions over the past 108 years – and especially over the past decade – that have spawned much of the anger, resentment and hatred that has permeated US society to its very core as a result of the Fed’s monetary policies.
Yet because much of the public fails to grasp the insidious implications of endless money-printing which makes owners of assets exorbitantly rich at the expense of regular workers, popular anger at the Fed remains virtually non-existent, despite clear warnings from Thomas Jefferson, and countless others over the decades, about the dangers posed by central banking.
And so, taking advantage of the general public’s general gullibility, the Fed continues to lie and dissemble at every opportunity, of which the most recent example was last week when Powell said that “inequality has been with us for increasingly for four decades” and arguing that monetary policy is not a cause for that. What he forgot to mention is that four decades ago is when the Nixon closed the gold window….
Me…
That is the basis of my view. That it is monetary policy that is dividing society, making the rich exponentially richer and compromising regular peoples’ ability to keep up. It is completely disgusting and it needs to be muted for the sake of good market management in order to try to be on the right side of it.
But it is clear to me that the Fed and Keynesian funny munny system are to blame and it’s getting worse because as noted in the article, the majority of the public does not get it. They are too busy (IMO) following social signals instead of monetary signals that are instigating the alarming social signals.
The closing of the gold window gave this evil entity full license to do as it pleases where debt and (funny) munny/bond manipulation are concerned. Just print, print and print some more * until economic problems are papered over. Unfortunately, they are not only papered over for the rich, they are transformed into massive wealth afterburners and due to the resulting inflation problems, they become a drag on those working paycheck-to-paycheck.
In my experience the Fed is always willing to bail out the inflated mess at times when it liquidates to the tune of the lower bounds on the Continuum (below) and it is always stern and unforgiving when it threatens to violate the upper bounds. See today’s deflation fears and 2018’s prick of the Continuum’s limiter (monthly EMA 100) as prime examples. Today Jerome Powell is…
But in late 2018 Jerome Powell was dead eyed…
They think they can regulate the economy and the financial system; keep it running at peak performance. But all they can actually do is perform a cheap parlor trick where they open the floodgates at times of financial crisis (AKA righteous deflation that would end this depraved system if given the chance) and close those gates tightly at times when the rising yield threatens to undo the racket at the top side (red dashed limiter).
There are lots of other components involved but it’s basically as simple as that. We called it (the reason Powell was inexplicably hawkish in late 2018) in real time one way and we called it (the reason Powell has completely flipped to steroidal dovish) in 2020.
It’s a sick system and it’s at the heart of America’s social/economic problems and insofar as other major global systems are Keynesian, it’s working against the people there as well, whether they know it or not. But the US version is really sick and twisted. And the public does not get it, and instead we have various social factions scapegoating each other with a president all too willing to be a part of that process.
* Assuming the Continuum allows for it.
