Towards A Lower R* By Way Of Financial Instability And Consolidation ….

“Monetary and financial stability – can they be separated?”(Isabel Schnabel)

May 27, 2023

Summary:

· The US structural (productivity-driven) strategic transformation is tipping the Fed’s balance of risks further, towards its employment mandate, in industrial processes where the rubber hits the road.

· According to John Williams, R* has got Long Covid.

· “R* Long Covid” is symptomatic of the Fed’s failure to stop easing, in March 2021, when the Mercury in the inflation thermometer began to shoot up.

· John Williams deduces that R* is so weak that monetary policy is too tight.

· John Williams implies that further monetary policy tightening will lead to financial instability followed by recession.

· According to Williams’ staffers, R** is the brand name of the vaccine for the “R* Long Covid” virus.

· The IMF’s recommended cure for “R* Long Covid” is a new monetary policy treatment framework, guided by “Brimmer’s Law” to lower the patient’s R** factors.

· John Williams also implies that monetary policy in the Eurozone is relatively more restrictive than in the US.

· Eurozone R** is, most likely, negative, in real terms.

· By nature of its single mandate oath, the ECB is legally obliged to euthanize the Eurozone economy with “R* Long Covid”.

· The ECB would like to celebrate its 25^th anniversary with an existential crisis that challenges and ultimately expands the scale and longevity of the Eurozone.

· To evade Euthanasia, the ECB intends to sedate the Eurozone economy to perform a banking sector consolidation operation instead.

· Luis De Guindos frames the US Regional Banking crisis as a catalyst for Eurozone banking sector consolidation.

· De Guindos envisions that banking sector consolidation, triggered by financial instability, will take place over the next twelve months.

· Isabel Schnabel understands that financial stability policy and monetary policy are causally linked by deflationary insolvency.

· Isabel Schnabel pretends to misunderstand that the ECB’s single mandate response, to inflation, can also trigger the insolvency that causally links financial stability policy and monetary policy.

· Isabel Schnabel’s feigned ignorance is a deliberate ploy to justify the ECB’s desire to trigger Eurozone banking sector consolidation.

· The ECB’s desire raises the risk, of Eurozone Fragmentation, because the central bank is, currently, insolvent, and, hence, incapable of being a sustainable lender of last resort in a financial crisis.

· Christine Lagarde intends to risk a financial crisis, in order, to achieve banking sector consolidation, with the causal excuse that high Eurozone inflation justifies “sustainably high” interest rates.

· De Galhau and de Cos have decided to deliver “de Consolidation” and “de Soft Landing” simultaneously.

· Europe Inc. is hedging itself against “de Consolidation”, and Macron’s version of “Strategic Autonomy”, by “Friend Shoring” its operations into North America.

· The EU’s bi-decennial pessimism, on China, is both coincident and causal with Europe Inc’s “Friend Shoring” agenda.

· Neel Kashkari has revealed his “Hooters” in response to current financial instability.

· “Kashkari’s Hooters” feel like higher capital adequacy requirements and tighter regulatory oversight.

· Higher capital adequacy, in weak banking sector capital markets, “Hoots” enlargement surgery through consolidation.

· “Logan’s Run” has the look, and feel, of “Kashkari’s Hooters” through the frame of “Brimmer’s Law”.

· “Logan’s Run” reveals US banks frequently availing themselves, at the Fed’s window, as a normal process, rather than stigmatized failing that leads to consolidation.

· Treasury Secretary Yellen is consistent with “Brimmer’s Law”, and supports a diverse US banking sector, rather than consolidated TBTF concentrated financial sector risk.

· The Fed is nudging attention away, from its inflation target failure, towards, a higher target, through the application of “Brimmer’s Law”, consistent with the new monetary policy framework requested by the IMF at its Spring Meetings.

· Thanks to Asian sanctions busters there’s no “+” in OPEC+.

· Mr. Market’s “Great Rot-AI-tion” is decoupling NASDAQ from Crypto and Bricks and Mortar stocks.

Extracts