Dec 7, 2020
The Fed Has Our Back
“As government borrowing soars, vulnerabilities exposed this spring are likely to be tested again and more frequently, with even small shocks requiring heavy Fed intervention, Darrell Duffie, a Stanford University professor and outside adviser to the Fed, told MNI. The Congressional Budget Office estimates the quantity of Treasuries outstanding to jump to $24 trillion by 2023, from $20 trillion currently, before soaring to an estimated $120 trillion by 2050, Duffie said.” — 18th Nov 2020
On 15th Oct 2020, the Fed openly admitted that the UST market cannot withstand even modest stress for very long.
This means that increasingly small amounts of stress will likely be met faster with increasingly-large amounts of stimulus and/or Fed balance sheet expansion. Neoliberal economists and US government policymakers are getting the system they always wanted. Or, as former Fed governor Larry Lindsay said in a moment of honesty in 2015:
“By the way, this always ends this way — Rome, the Ming Dynasty, Zimbabwe…it’s so depressing. It always, always, always ends this way, this end game we’re all talking about…The financial arrangements of the state are no longer sustainable…it is not a pretty change if we get there, and it is a matter of political liberty because government will NOT voluntarily let itself go out of business…it will use all its powers available to government to fund itself.” -Former Fed Governor Larry Lindsay, 2015
This relentless money printing will cause paper currencies to depreciate against hard assets. This remains good for Bitcoin, Gold, Silver and Commodities.
