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You put more faith in the Fed than I do. As I see it, the Fed caused this crisis with a decade of loose money policy. Then they told us there would be no infla

by lowkey 4y ago

You put more faith in the Fed than I do. As I see it, the Fed caused this crisis with a decade of loose money policy. Then they told us there would be no inflation. Then inflation was transitory. Then they were serious about fighting inflation until banks started failing. Suddenly they reversed course and wiped out 2 years of quantitative tightening in the past 2 weeks. [0] The Fed hasn’t apologized for any of those actions or accepted any responsibility, which tells me they haven’t learned a thing. As far as I am concerned the Fed is both regulator and PR arm of the banking industry. The Fed regulates their member banks, and very poorly it would seem based on events during the GFC and today. You can take Powell at his word. I remain skeptical. [0] https://mobile.twitter.com/1MarkMoss/status/1640099789537939457/photo/1 https://mobile.twitter.com/1MarkMoss/status/1640099789537939...

kortilla 4y ago
>Then they were serious about fighting inflation until banks started failing. Their stance on interest rates has not changed. That tweet is someone who doesn’t understand the nuance of the balance sheet. >As far as I am concerned the Fed is both regulator and PR arm of the banking industry. They are not helping banks. What are you missing here? Nothing they are doing with rapid rate hikes is advantageous to banks. >You can take Powell at his word. I remain skeptical. I’m not, I’m just looking at his actions and the markets priced in probabilities of interest rate changes from the fed.
- lowkey 4y ago
  I agree that they have not lowered rates. However as the chart shows they did dramatically increase the Fed’s balance sheet in the past two weeks. They did this in order to facilitate loans to banks who have underwater assets on a mark to market basis. It would be one thing if they were lending to banks based on the current market value of the assets, but instead they are letting the banks pretend the assets are worth what they would be if held to maturity. So both the Fed and the banks are playing pretend. We can argue about whether or not this is inflationary. I suppose it would depend on what these funds are used for. It certainly isn’t as inflationary as if the Fed had simply given this money to consumers to spend. However, I do think it is an error to ignore such a swift reversal of quantitative tightening over the past couple years.

by lowkey 4y ago

kortilla 4y ago

>Then they were serious about fighting inflation until banks started failing. Their stance on interest rates has not changed. That tweet is someone who doesn’t understand the nuance of the balance sheet. >As far as I am concerned the Fed is both regulator and PR arm of the banking industry. They are not helping banks. What are you missing here? Nothing they are doing with rapid rate hikes is advantageous to banks. >You can take Powell at his word. I remain skeptical. I’m not, I’m just looking at his actions and the markets priced in probabilities of interest rate changes from the fed.

lowkey 4y ago
I agree that they have not lowered rates. However as the chart shows they did dramatically increase the Fed’s balance sheet in the past two weeks. They did this in order to facilitate loans to banks who have underwater assets on a mark to market basis. It would be one thing if they were lending to banks based on the current market value of the assets, but instead they are letting the banks pretend the assets are worth what they would be if held to maturity. So both the Fed and the banks are playing pretend. We can argue about whether or not this is inflationary. I suppose it would depend on what these funds are used for. It certainly isn’t as inflationary as if the Fed had simply given this money to consumers to spend. However, I do think it is an error to ignore such a swift reversal of quantitative tightening over the past couple years.