“Third Mandate Truth” Shall Set The Fed Free From The “Rumsfeld Quadrant”
“Financial stability is key to achieving price and economic stability.” (Kiley and Mishkin)
Summary:
· The “CIOgnoscenti” accepts that “the biggest global election year in history” is computationally irreducible.
· The “Truth” is that the Fed requires a Financial Stability Policy “Third Mandate”, to act as a Single Mandate, in order, to escape from its “Prison of Transience”.
· The Fed is thought-leading this “Truth” with assistance from Jamie Dimon, and useful idiots in, the naughty corner of, the Private Credit (Asset) Class.
· Contagious financial instability is spreading, 1990s style, from Private Credit, into the Federal Reserve Banking System, through the agency of real estate.
· Since Private Credit losses are defined, by name, the political pushback against socializing them, with bailouts, will create failures and a disinflationary economic headwind.
· Familiar “Fed Trusted Sources and Communicators” speak the “Truth” about, the imminent application of the “Third Mandate” from, rising NPLs in the naughty corner of the Federal Reserve Banking System.
· Mandate drift, towards a “Third Mandate”, is being driven organically by the erosion of quality, and quantity, in the BLS household data component of the Employment Mandate input.
· A “new definition of full employment” is a question; left begging, loudly, by the mandate drift towards a “Third Mandate”.
· The “OPEC+ October Plausible Denial” has replaced the “OPEC+ October Surprise”.
Extracts
· The correlated CIOgnitive dissonance about the US Dollar, and Gold affirms the view that the former is the global reserve medium of “unsanctioned” commercial exchange but not the global reserve of economic value.
· The “CIOgnoscenti” has, so far, missed the key signal that the Fed intends to lead a developed central bank wave of macroprudential policy easing, in lieu of inflation-challenged monetary policy easing.
· The recently reported poor US bank earnings season signals that it is time for macro-prudential policy easing.
(Source: the Author)
· The “Leader of the Free World” is lagging, globally, in the “biggest global election year in history”.
(Source: the Author)
· Jamie Dimon “narrates”, his firm’s positioning for, a Lehman/Bear Stearns moment at, his competitors, in private credit, outside the Federal Reserve Banking system.
(Source: the Author)
· Trusted Sources, and Communicators, are liberating the Fed’s “Prisoners of Transience”.
· Trusted Sources, and Communicators, are, also, rescuing the Fed’s lost guidance tool.
· The Fed signals an intended macroprudential easing, “in lieu of an inflation-challenged monetary policy easing”, through a Trusted Source and a Trusted Communicator.
(Source: the Author)
· The Fed is deploying a de facto new definition of full employment, to conceal the fact that it has been de jure Politically, and Fiscally captured and dominated, by the elected branch of the Tree of Liberty.
(Source: the Author)
· The immediate challenge, for the FOMC, is to frame the latest employment sitrep in the context of the new definition of full employment imperative.
(Source: the Author)
· Biden’s Strategic Petroleum Reserve repurchase tactic makes Powell’s “Transient” pause structurally permanent.
· Biden’s Strategic Petroleum Reserve repurchase swing signals that the USA has lost its Swing Producer Status.
· The US loss of Swing Producer Status signals the loss of the disinflationary growth initiative.
· The loss of the disinflationary growth initiative signals the Biden loss of the presidential election initiative.
· The “October Surprise” is likely to be withheld OPEC+ supply until Trump is elected.
(Source: the Author)
· Biden’s “OPEC+ October Surprise” mitigation strategy is a regional capitulation.
· A “Desert Storm” is blowing in from China.
· The “Desert Storm” is a regional headwind that will raise regional risk premiums.
(Source: the Author)
