What’s This Pivot Talk All About?
Guest Post by Dennis Miller at Miller On The Money
The stock market and financial pundits hang on every word from Federal Reserve Chairman, Jerome Powell. They attempt to “read between the lines,” looking for clues about what the Fed is going to do next. When are they going to “pivot” and start cutting rates?
With the 2008 bank bailout, the Fed flooded the financial system with free money, effectively reducing interest rates to zero. Individuals, businesses and government got hooked on cheap credit, borrowing and spending like addicts, with no concern for the consequences.
The banks were deemed “too big to fail.” Congress passed the (TARP) Troubled Asset Relief Program, bailing out lenders holding billions in debt that could not be repaid.
The Fed’s balance sheet immediately jumped over $2 trillion, and the Fed continued creating credit out of thin air until their balance sheet topped $9 trillion. Real inflation reached double digits and could no longer be ignored.
When the government couldn’t find lenders willing to accept low rates, the Fed took up the shortfall, creating credit out of thin air with a simple bookkeeping entry.
AFTER CHRISTMAS DEALS
As part of the 2008 bailout, The Dodd-Frank bill was passed to protect the public from further harm. Former Labor Secretary Robert Reich, shares some sneaky legislation quickly slipped into a government spending bill:
“Some believe the central political issue of our era is the size of the government. They’re wrong. The central issue is whom the government is for. ….”
Central Banks and the FED are your mortal enemy…they want your money, property and ultimately your life because you will have become a useless eater.
Pivot? Prefered position in a circle jerk.
We’re just gonna have to take your word for that…lol!
But who eats the cookie?
If you really want to know what direction things are going do your fucking homework.
US government debt is skyrocketing, and there is no end to that trend in sight. The Federal Reserve Reverse Repo Account, which it uses to purchase US Treasuries at auction in order to keep down interest rates has dropped from 2 billion dollars, to about 700 million, and will probably be completely depleted by Spring of 2024.
Banks are having to sell 30yr Treasuries they purchased a few years back at huge losses to pay off depositors that are withdrawing their money to reinvest in Money Market and short term Treasuries.
The Commercial Real Estate Market is in the toilet, and many of the loans Banks and other lenders have made on the CRE portions of their portfolios are going to default causing massive losses.
Add this all up and what you have is a situation where there is an increasing need for cash due to out of control Government spending, and money destruction happening on a mass scale.
You also have the lender of last resort to the Government, running out of money to loan the Government. You also have foreign Treasury investors pulling back on their purchases either due to poor political relations, or fear of the US confiscating any money in the US system for political reasons.
If you look at all this information and come to the conclusion that this is a good environment to invest money into assets at peak prices, then you deserve the results of your decisions…..
Take it easy Fancis.
All “they” need to do is change their rules. Problem solved.