Agreed, especially "End the Fed". The Fed can only affect short rates and the markets do a better job of setting ALL rates, so what really is the point of the Fed? Also why does the Fed need TWO trading floors, one in NY and one in Chicago if not for manipulating many markets which be far better left alone to send correct economic signals.
As a matter of interest, how does one "pawn" $7 Trillion of USTs without pushing prices down so increasing rates? I suspect the answer is "very slowly". But when the economy goes into recession and the Fed responds in the usual way with lower short rates and QE/YCC at the longer end, that would seem to be something of a dilemna?
Banana republics, who earned the epithet with out-of-control spending, do not get to dictate the rates paid on their bonds to anyone. And, $40 trillion in debt and rising exponentially, the U.S. now officially qualifies as a banana republic. The Fed has always denied monetizing the debt, but with Japan on the ropes and China selling its Treasuries as fast as it can, it is obvious that they have been monetizing the debt massively. END THE FED, repeal existing legal tender law, and re-institute the gold standard. The idea of a 40-trillion debt was unthinkable when people actually had to come up with gold to pay their taxes- a rather simple carrot and stick way of encouraging balanced budgets.
Treasury, with the Fed, is still inventing new games to kick the can further down the road. First, to stop foreign Governments selling USTs (To buy Gold) at a difficult time ($10 Trillion to finance/re-finance this year) they are creating many new "Swap lines" using mouse clicked Dollars in preference to selling USTs. (QE in disguise?). Second, they are pushing Stablecoins tied to (a declining) USD via USTs which, because the USTs are tokenized, carry NO coupon. So essentially, USG is trying to offload its massive debts to ROW at zero "interest" cost. All this while suppressing Gold to kill the canary, hence my comment about market manipulation.
Cute tricks but how long can this continue? And where would you position yourself to survive? Paper or real physical assets?
1. It is not technically possible to "end the Fed." The economy runs on USD and all of the USD that actually exist are the liquid liabilities of the Fed.
2. You are correct that the markets should set all interest rates, not the Fed. However, for the markets to do this, the Fed must define and stabilize the real value of the dollar.
3. With an undefined, floating dollar. all interest rates are indeterminate and meaningless. This is because for an interest rate to have a determinate meaning, "that which is to be paid back" must be the same THING as "that which was borrowed." And right now, it is not.
4. FYI, QE involves exchanging 1-day T-bills (which is what bank reserves are under IORB) for USTs. In general, QE that involves buying T-bills will be DEFLATIONARY. At some point as the Fed moves out the maturity chain, QE MAY become inflationary. In contrast, federal deficits are inflationary because the USTs issued to pay for them function as USD liquidity.
"The few legitimate things the Fed does like payment and banking oversight are already done by Treasury or OCC."
Let's call out the Fed's utter failure at banking oversight. Let's discuss a long term regional Fed bank president.
Distilled to the briefest summary, via Grok, here's what happened. All truthful - I remember this well, and yet none had courage to go on TV to affirm:
"[Silicon Valley Bank] SVB collapsed in March 2023 from a textbook failure any junior analyst would spot: funding volatile uninsured tech deposits with long-duration bonds that cratered when rates rose. [Rates rose because the Fed under Fed head Jerome Powell began raising rates in 2022.]
"Management [at the San Francisco Fed] ignored massive duration mismatch and liquidity risks. By then, Mary Daly had led the Federal Reserve Bank of San Francisco—SVB’s primary supervisor—for five years. Examiners flagged issues but never forced fixes, distracted by DEI, climate priorities, and a soft culture. Daly refused personal accountability, blaming a vague “system,” and remains in her job to this day. A complete abdication of banking oversight."
Both Daly, and Lisa Cook [who allegedly committed mortgage fraud by claiming multiple properties as her “primary residence”] should quietly resign in disgrace, but they lack shame, and the Fed protects its own, and the Fed supported unAmerican DEI policies for many years.
Jane is the granddaughter of Estée Lauder & her father is the son, and he went to school w/Donald Trump & they remain friends. Your point? There are many millionaires & billionaires that are not like the self indulgent political hacks like the Koch brothers, Bloomberg & many others. Just because they have money, doesn’t make them the same.
Great Article.
But before ending the Fed, the Fed should clean up its huge mess.
Start with creating the money to pay all interest owed, or was already paid, on student loans.
Also refund the excess student tuition cost the Fed's inflation caused.
Then prohibit the Fed from ever profiting from student loans in any way.
Next, prohibit the Fed from ever buying any mortgage backed securities or their equivalent.
House prices and property taxes would fall back to reality and true affordability for main street.
The Fed won't suffer actual loss since it did nothing to create this money.
The taxpayers should not have to pay for the Fed's experiments that always boost profits of 1%.
Giving the money back to the people who will actually use it would truly stimulate the economy.
Agreed, especially "End the Fed". The Fed can only affect short rates and the markets do a better job of setting ALL rates, so what really is the point of the Fed? Also why does the Fed need TWO trading floors, one in NY and one in Chicago if not for manipulating many markets which be far better left alone to send correct economic signals.
As a matter of interest, how does one "pawn" $7 Trillion of USTs without pushing prices down so increasing rates? I suspect the answer is "very slowly". But when the economy goes into recession and the Fed responds in the usual way with lower short rates and QE/YCC at the longer end, that would seem to be something of a dilemna?
Banana republics, who earned the epithet with out-of-control spending, do not get to dictate the rates paid on their bonds to anyone. And, $40 trillion in debt and rising exponentially, the U.S. now officially qualifies as a banana republic. The Fed has always denied monetizing the debt, but with Japan on the ropes and China selling its Treasuries as fast as it can, it is obvious that they have been monetizing the debt massively. END THE FED, repeal existing legal tender law, and re-institute the gold standard. The idea of a 40-trillion debt was unthinkable when people actually had to come up with gold to pay their taxes- a rather simple carrot and stick way of encouraging balanced budgets.
Treasury, with the Fed, is still inventing new games to kick the can further down the road. First, to stop foreign Governments selling USTs (To buy Gold) at a difficult time ($10 Trillion to finance/re-finance this year) they are creating many new "Swap lines" using mouse clicked Dollars in preference to selling USTs. (QE in disguise?). Second, they are pushing Stablecoins tied to (a declining) USD via USTs which, because the USTs are tokenized, carry NO coupon. So essentially, USG is trying to offload its massive debts to ROW at zero "interest" cost. All this while suppressing Gold to kill the canary, hence my comment about market manipulation.
Cute tricks but how long can this continue? And where would you position yourself to survive? Paper or real physical assets?
End the Fed.
Great Article, yet Methinks the FED is short on future days…same same for all other Bankers Banks across The Planet…
https://x.com/fnowisthetime/status/1384879287015182347?s=61
1. It is not technically possible to "end the Fed." The economy runs on USD and all of the USD that actually exist are the liquid liabilities of the Fed.
2. You are correct that the markets should set all interest rates, not the Fed. However, for the markets to do this, the Fed must define and stabilize the real value of the dollar.
3. With an undefined, floating dollar. all interest rates are indeterminate and meaningless. This is because for an interest rate to have a determinate meaning, "that which is to be paid back" must be the same THING as "that which was borrowed." And right now, it is not.
4. FYI, QE involves exchanging 1-day T-bills (which is what bank reserves are under IORB) for USTs. In general, QE that involves buying T-bills will be DEFLATIONARY. At some point as the Fed moves out the maturity chain, QE MAY become inflationary. In contrast, federal deficits are inflationary because the USTs issued to pay for them function as USD liquidity.
"The few legitimate things the Fed does like payment and banking oversight are already done by Treasury or OCC."
Let's call out the Fed's utter failure at banking oversight. Let's discuss a long term regional Fed bank president.
Distilled to the briefest summary, via Grok, here's what happened. All truthful - I remember this well, and yet none had courage to go on TV to affirm:
"[Silicon Valley Bank] SVB collapsed in March 2023 from a textbook failure any junior analyst would spot: funding volatile uninsured tech deposits with long-duration bonds that cratered when rates rose. [Rates rose because the Fed under Fed head Jerome Powell began raising rates in 2022.]
"Management [at the San Francisco Fed] ignored massive duration mismatch and liquidity risks. By then, Mary Daly had led the Federal Reserve Bank of San Francisco—SVB’s primary supervisor—for five years. Examiners flagged issues but never forced fixes, distracted by DEI, climate priorities, and a soft culture. Daly refused personal accountability, blaming a vague “system,” and remains in her job to this day. A complete abdication of banking oversight."
Both Daly, and Lisa Cook [who allegedly committed mortgage fraud by claiming multiple properties as her “primary residence”] should quietly resign in disgrace, but they lack shame, and the Fed protects its own, and the Fed supported unAmerican DEI policies for many years.
Here's a deeper dive on the father in law. You'll never guess who he's connected to.
https://www.instagram.com/reel/DYTYhCHu2HO/?igsh=MzJhc2xtaWI4MnM5
Look into Mr. Warsh's wife + father in law.
Jane is the granddaughter of Estée Lauder & her father is the son, and he went to school w/Donald Trump & they remain friends. Your point? There are many millionaires & billionaires that are not like the self indulgent political hacks like the Koch brothers, Bloomberg & many others. Just because they have money, doesn’t make them the same.
Jane Lauder, net worth ~ $2 Billion.