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I think it’s important to point out that this is what the Fed has been waiting for since 2008. We needed inflation. Now this debt gets washed away. Merry Chris

I think it’s important to point out that this is what the Fed has been waiting for since 2008. We needed inflation. Now this debt gets washed away. Merry Christmas y’all, not only did we bail Wallstreet out in 2008, we’re now bailing out the bail out with inflation lol. And we’re too stupid to even realize it. They have no intention of curbing inflation until the debt is handled.

vmception 4y ago
> I think it’s important to point out that this is what the Fed has been waiting for since 2008. We needed inflation. Now this debt gets washed away. Can you elaborate on that? It seems related to my observation that balance sheet reduction ideas partially handle themselves. The Fed and the rest of us are still operating on the general expectation that the borrower repays. The Fed holds collateralized debt backed by mortgages being repayed, they hold corporate bonds, and they hold US treasuries. A default of course would be largely inconsequential and only mildly embarrassing for the Fed, as there are no Federal Reserve shareholders affected by the Fed's performance (although there are shareholders). Aside from being able to point at their balance sheet and say "see, numba go down!" I really can't extrapolate too much more from that. It is convenient that the Fed's own market manipulations assist in the declining asset valuations to make that number go down faster. But its merely an observation. The balance sheet expansion beginning in 2008 was mostly the purchasing of these mortgage backed securities, but more than half was from covid relief packages that Congress forced the Fed to participate in (but lets not pretend a scared congress wrote those packages overnight, that stuff was prewritten opportunist end game moves, accelerating the existing macroeconomic trends that were just waiting for a catalyst) Given so many purchasing sprees and balance sheet increases have occurred since 2008, I can't really focus on 2008. The maturing assets are being repaid and most(? maybe?) have a fixed interest rate thats already set in stone, so I can't really worry about this idea of the Fed's hands tied or actions related to this. Yes, if the mortgage holders have a disruption in ability to repay - and the same for the corporations - then the Fed.... has faster declining asset values? I don't know if they really care about the performance.
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vmception 4y ago

> I think it’s important to point out that this is what the Fed has been waiting for since 2008. We needed inflation. Now this debt gets washed away. Can you elaborate on that? It seems related to my observation that balance sheet reduction ideas partially handle themselves. The Fed and the rest of us are still operating on the general expectation that the borrower repays. The Fed holds collateralized debt backed by mortgages being repayed, they hold corporate bonds, and they hold US treasuries. A default of course would be largely inconsequential and only mildly embarrassing for the Fed, as there are no Federal Reserve shareholders affected by the Fed's performance (although there are shareholders). Aside from being able to point at their balance sheet and say "see, numba go down!" I really can't extrapolate too much more from that. It is convenient that the Fed's own market manipulations assist in the declining asset valuations to make that number go down faster. But its merely an observation. The balance sheet expansion beginning in 2008 was mostly the purchasing of these mortgage backed securities, but more than half was from covid relief packages that Congress forced the Fed to participate in (but lets not pretend a scared congress wrote those packages overnight, that stuff was prewritten opportunist end game moves, accelerating the existing macroeconomic trends that were just waiting for a catalyst) Given so many purchasing sprees and balance sheet increases have occurred since 2008, I can't really focus on 2008. The maturing assets are being repaid and most(? maybe?) have a fixed interest rate thats already set in stone, so I can't really worry about this idea of the Fed's hands tied or actions related to this. Yes, if the mortgage holders have a disruption in ability to repay - and the same for the corporations - then the Fed.... has faster declining asset values? I don't know if they really care about the performance.

deleted 4y ago

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