More fun in the new world
Wise men have tried other ways. They have tried to understand our state of being, by grasping at its stars, or its arts, or its economics. But, if there is an underlying oneness of all things, it does not matter where we begin, whether with stars, or laws of supply and demand, or frogs, or Napoleon Bonaparte. One measures a circle, beginning anywhere.
- Charles Fort, Lo!
“There is nothing more deceptive than an obvious fact.” - Sherlock Holmes
“How can it be that events, conditions and authorities’ actions have no impact on the stock market? The answer is: They are not causes but results.” - Robert Prechter
“…the news [as such] is often of little value, since counteracting forces [may] operate in the opposite direction.” - Joseph De La Vega (1688)
In September 2021 the official CPI was 5.38%. Since then, the Federal Reserve has added $295 Billion of Treasuries.
In Sept. 2021, the Case-Shiller U.S. National Home Price Index was up 19.69% YOY. Since then, the Fed bought $204 Billion of MBS.
I mean, they actually added (according to the above) MBS last week.
“It's just like the show before. The news is just another show.” - Jane’s Addiction
Some people get very mad about QT-deniers like me, to which I say, sure, there’s been some nominal QT so far, and more to come, but come on. Who are they kidding? They’re clearly not serious about this.
Lots of Fed-heads explaining how a watch works. I’m just keeping an eye on the time.
Why do I care?
QE "1, 2 and 3 really did not lift the economy. The academic studies show that. The Fed won't accept that, but to me, the nasty aspect of the quantitative easing is that as it came in, it exacerbated the income and wealth divides." - Lacy Hunt
“I like to nickname quantitative easing “monetary policy for rich people.” You could quote me on that. You know, they took a shot; it didn’t work. And then they doubled down and did it again. Same result.” - Steve Eisman
“…results indicate that monetary tightening strongly decreases the share of national income held by the top one percent and vice versa for a monetary expansion, irrespective of the position of the economy.” - Mehdi El Herradi & Aurélien Leroy
“QE has been a massive deceit and a huge factor in driving inequality.” - Nomi Prins
"QE has perverted investor expectations about what the permanent cost of capital is." - Peter Cecchini
"A lot of what the Fed now has to do, remember, is going to go to these nameless hedge funds. Nobody wants to name them, because nobody wants to know that quantitative easing is there to bail out some hedge funds." - Raoul Pal, March 16, 2020
"...when you look at the wealth disparity today, which by the way, in my opinion, the biggest accelerant of has been QE, it's not even debatable..." - Stan Druckenmiller on Realvision, 2018
Wake me when the Fed QT’s their assets down to pre-Covid levels (or better Bernanke’s 2010 target of “under” $1 trillion.)
And they should own NO MBS (and didn’t, until 2008).
Dr. Paul. I thank the gentleman for yielding. I imagine
everybody agrees that the increase in the monetary base in this
last year-and-a-half is probably historic. I don't think we
have much in our history to look back at as a precedent. So I
would assume that we can't look back too easily and look at
trying to solve a problem like this and what we have to do and
how much the monetary base has to shrink.
As we talk about this, I think most people assume that
they're waiting for a signal from you when the balance sheet
might shrink. But even in the Depression, when it shrunk 16
percent, it wasn't done purposely; it was the way the system
was working back then. Can you give me a rather quick answer on
this? Do you have any idea what percentage the base should
shrink or might shrink, or is that something that you don't
even want to address?
Mr. Bernanke. No. I think we would like to bring the
balance sheet back to something consistent with where it was
before the crisis, which means enough to accommodate Americans'
demand for currency plus a modest amount of reserves in the
banking system, and that would suggest something under a
trillion dollars I think would be--
Dr. Paul. A trillion dollars?
Mr. Bernanke. Or less, yes.Remember too - the Fed's ridiculous experimental ZIRP and QE policies which lasted for years ignited a desperate search for yield, which destroyed free-market price discovery and distorted the price of everything in the world.
"Consider a turkey that is fed every day," Taleb writes. "Every single feeding will firm up the bird's belief that it is the general rule of life to be fed every day by friendly members of the human race 'looking out for its best interests,' as a politician would say. "On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief."
Speaking of massive corruption, these are the financial institutions where top execs will never be criminally prosecuted (the Eric Holder Doctrine):
"You definitely don't want to get on an airplane with a pilot who doesn't know what he's doing." - actual CNBC host quote
Sorry - I’m out of the T-shirts.
"If I examine a painting through a microscope, I shall learn about the texture of the paint, but nothing about the artist's intention in painting the picture...I must stand back and see it as a whole before I can understand it." - Colin Wilson, 𝘛𝘩𝘦 𝘖𝘤𝘤𝘶𝘭𝘵
Back in August, the Fed (and their media acolytes) made a big deal about how the MBS numbers were not an accurate portrayal of the QT they were doing due to reinvestment timing issue but soon, very soon, this effect would dissipate. I believe they said by late September. And we are nearly there so any day now we should see the QT… I admit that I haven’t taken the time to look too deeply into the technical weeds on that point.
The saddest part is, the mechanism which is once again going to decimate us, is as well known and comprehensible to the vast majority of the most decimated victims, who vastly outnumber those it has enriched, as the latest quantum physics discoveries at CERN. They'll be hit by a meteor in their sleep, which the people who supposedly protected them, kept adding more mass and accelleration to, while making sure it impacted far from their own luxurious survival bunkers.