TRAPPED: The Fed Is Fettered between Inflation and Financial Meltdown

Before you read the following quote from a Fed employee, you had better set your coffee, beer or wine down so you don’t spray all over the carpet or the person next to you. This is how dense the Fed is when it comes to learning from its own mistakes after it first tried quantitative tightening (QT) in late 2017-2019 and failed miserably:

The principle lesson was that we can do QT. It had never been done in the size that the Fed was trying at the end of 2017, we accomplished that goal, we ran down the balance sheet successfully – you know, you had some volatility towards the end, but by and large it was a very successful program.

“A Havenstein Moment.“

The truth is the Fed fell far short of its stated QT goal and had to hit the brakes and eventually even reverse course back to QE. So, it did not accomplish that goal. That’s an outright lie or bald-faced stupidity. Aside from that crash of the stock market in the final quarter of 2018 that was only averted as it entered a bear market because the Fed rushed in to say it would be backing off its planned interest hikes and its stated goal for quantitative tightening much sooner than it had originally indicated … and aside from that massive repo crisis I referred to as the “Repocalypse” in the latter half of 2019 … it went splendidly well.

Well, until the Repocalypse hit because they did’t slam on the breaks hard enough nor reverse quickly enough. So, aside from the fact that the only way the Fed was able to stop the Repocalypse was to pivot right back to “not-QE” that really was QE and finally to full-on QE that they admitted was QE, it went great. It was as Yellen promised, as boring as watching paint dry on on your red house on a day when a rainstorm comes along before it is dry and washes the paint down the street in a river of red.

It went so well that they immediately pumped the QE back up far higher than it was before in order to rapidly start the next cycle in the spring of 2020.

Lesson learned!

Except not.

It’s hard to imagine, after seeing just how horribly bad QT went in that first go-around, that the Fed actually thought it could expand its balance sheet almost twice as high as it was back then and then do QT at an even faster pace! As I’ve written for years, the Fed clearly has no end game … other than the end of our financial system.

Who’s in charge of destroying small banks?

I’m pretty sure our economy could be better managed (especially given that economies should not be managed by central planners in the first place) by Captain Kangaroo than the likes of Treasurer Janet Yellen. Of course, now that I think about it, Janet Yellen with her modified bowl cut looks like she could be Captain Kangagroo’s fraternal twin:

Now that Yellen, Powell, Biden & Co. have cobbled together their midnight deal to save all depositors, even those with hundreds of millions in the bank, but only so long as they are invested in the Federal Reserve’s favorite megabanks — the ones they call “systemically important” — you can expect a huge rush of all of the cherry accounts at community and regional banks into the top banks of Wall Street plus Wells Fargo of San Francisco and Bank of America in Charlotte.

Do you think those running those major banks were not aware of this coming windfall as they participated in crafting the program?

Here, again, in case you missed it in my last article, is Senator Lankford of Oklahoma informing Treasurer Yellen (who looks a bit like an opossum caught in the headlights of truth) about the damage he is already hearing about from the Treasury’s new, free, preferred-bank, deposit-insurance program: (I think you’ll have to admit it sounds almost apocalyptic.)……..more here

Click here for reuse options!
Copyright 2023 Hiram's 1555 Blog