The US Taxpayer (And Consumer) Will Pay For Jefferson’s Starship Flying Lessons And Related Miscellaneous Fed Balance Sheet Losses ….
The US Taxpayer (And Consumer) Will Pay For Jefferson’s Starship Flying Lessons And Related Miscellaneous Fed Balance Sheet Losses ….
“Who's more famous to the billion millions? Newsflash:”( Joe Strummer / Mick Jones / Topper Headon)
Summary:
· (Philip)Jefferson’s Starship, fuelled by Qualitative Easing, and Quantitative Tightening, is supposed to land softly, but he is still learning to fly.
· James Bullard is Jefferson’s Starship trainee co-pilot.
· The Federal Reserve Board and New York Fed are in “data dependent” flight school.
· Apparently, the Fed is still learning the Quantum Theory of the duality, and entanglement, of financial stability policy with monetary policy, aka Monetary Policy Transmission Theory.
· Since the Fed has been learning to fly since the Federal Reserve Act of 1913, it is a slow learner.
· Based on the latest estimate, of balance sheet losses, the Fed is learning a costly lesson.
· If the Fed was a privately owned bank, it would have failed/been acquired cheaply, by now, and its officials sacked/indicted.
· The Fed’s costly lesson will be paid for, by the US taxpayer, in future Federal Government liabilities which will form the Fed’s new balance sheet assets, to replace its “deferred out of thin air” loss-hiding assets.
· The Fed’s costly lesson will also be paid for, by the US consumer, in continually compounding monetary inflation which leaks, from the capital markets, into price inflation in the real economy.
· Isabel Schnabel is learning globally but failing to act locally.
· Schnabel has learned that the Eurozone economy, and the ECB’s balance sheet, cannot return to pre-COVID/pre-GFC levels.
· Schnabel has not yet learned that the ECB’s inflation target is meaningless if the Eurozone and ECB’s balance sheet cannot return to pre-COVID/pre-GFC levels.
· Schnabel’s costly lesson may fracture the Eurozone.
· Lagarde’s demure, to the Hawks, raises the costs of Schnabel’s lesson and the fracture risk.
· The EU and the ECB have selected the medium-sized banks for consolidation in the next phase of rate-hike-induced financial instability.
· If mishandled, the consolidation, of the medium-sized banks, will lead to broader contagion, in the Eurozone economy, that militates in favor of fracture.
· Citigroup’s Monte Carlo hiring simulation is consistent with the structural “Submerging Market fundamentals” in the Ungovernable Kingdom’s (UK’s) economic casino.
· The Ungovernable Kingdom (UK) has traded the protection, of protectionist Pax EU-Ropa, for “submerging” competition, on price, for the privileged access to the “Friend-Shored” supply chains and US$ reserve currency allocations, under the aegis of Pax Americana, against cheap and formerly subjugated Asian members of the British Empire.
· Mr. Market continues to discount the Ungovernable Kingdom (UK) as the “Poor Man of Europe” rather than the aspirational, yet, “Poor Man of Asia”.
· While the House may win, the House of Commons will lose in the Ungovernable Kingdom’s (UK’s) political casino.
· Platts’ recent Brent Tweak puts long-term inflation expectations into Backwardation.
· Platts’ recent Brent Tweak puts America in control of global long-term inflation expectations and contractually embeds the Exorbitant Privilege into the global economy.
· Platts’ recent Brent Tweak makes OPEC and Russia spot price takers.
· Platts’ recent Brent Tweak structurally enables the disinflationary basis for a US and global hypergrowth phase.
· Yellen’s World Bank capital raise pass means more “Banga” for the Masters of the Asset Class Universe subcontracted foreign policymaking buck.
· The Netherlands Anschluss progresses while deeper Eurozone political and economic union stalls.
Contextual References
· The Fed is now creating balance sheet assets “out of thin air” to cover its losses Ponzi Scheme style.
· The Fed will be unable to sustain its Ponzi Scheme balance sheet asset creation process for the latest signaled intended 125 Basis points of rate hikes.
(Source: the Author)
· The safest US$ asset is the liability of an insolvent US Central Bank.
· Fed insolvency is rapidly becoming a bigger problem than US inflation.
(Source: the Author)
· Central Bank insolvency is aligning with fiscal insolvency at a rapid pace in the global economy.
· The alignment of central bank and fiscal insolvency promotes the exclusive interest in financial stability policy.
· The interest in financial stability policy will enable the application of Modern Monetary Monopsony Theory (MMMT).
(Source: the Author)
· Monetary Policy tightening is ending because the Fed has reached the technical “unrealized” insolvency event horizon.
· The Fed’s expanding balance sheet is a black hole that is pulling the central bank towards exclusive Financial Stability Policymaking to the exclusion of Monetary Policymaking.
· Jackson Hole should probably be renamed Central Bank Black Hole.
(Source: the Author)
· The Fed has Qualitatively Eased circa $ 2 Trillion, in credit risk, in response to the Quantitative Tightening that is simultaneously shrinking its balance sheet.
· The absurd combination of Qualitative Easing and Conventional Tightening is the final politically-hammered moral hazard nail, in the coffin of Fed credible commitment, that some call MMT.
· Qualitative Easing is the balance sheet gateway to further Quantitative Easing.
(Source: the Author)
· The ECB has signaled that its inflation mandate is making it insolvent.
(Source: the Author)
· The EU’s evasion, of fiscal austerity discussion, begs the question of whether there can be a return to pre-COVID/pre-Ukraine War fiscal rules and deficits.
(Source: the Author)
· “Armageddon Time” has now been reached, at which the ECB’s delivery of disinflation, and consolidation, actually risks splitting up the Eurozone.
(Source: the Author)
· Chancellor Hunt’s fiscally regressive bondage of the UK’s Taxpaying Slaves, to SWFs, structurally enforces the “Submerging Market” fundamentals, in the Ungovernable Kingdom (UK), that will cause Populist rebellion against perceived “Foreign Capital” and the government that enables it.
(Source: the Author)
· In the Polycrisis, Beyond COVID(BC2), there is Beyond Petroleum (BP).
· Thanks to the Ukraine War, Beyond Petroleum (BP) is now closer than you think.
· The Ukraine War has already tipped Russia Beyond Petroleum into Failed State status.
· Beyond Petroleum the “Exorbitant Privilege” is less challenged.
· Beyond Petroleum some old US allies may become “Frienemies”.
(Source: the Author)
· Biden’s SOTU re-election message is domestic which means that foreign policy will be subcontracted out to US Inc. and the Masters of the Asset Class Universe.
(Source: the Author)
· Germany and the Netherlands unified Time Warp “step to the Right”, is a protectionist threat to EU/Eurozone integrity.
(Source: the Author)