Now Fed Chair Powell has just said it's time for the pace of the roll-off to slow.
That's the curved line slowly trending down from it's peak near $9 trillion to $7.5 trillion now.
Just as the National Debt will never be paid down, the Fed will never stop intervening in the Treasury market to limit supply and support prices, which suppresses market driven interest rates.
Powell isn't serious about fighting inflation.
Full time as a percentage of civilian population in September was 50.3%, and for 2022 through September averaged 50.15%.
Not bad, considering.
The Fed will see little evidence in this figure that its interest rate increase policy is harming employment.
Stocks on Friday collapsed after a head fake to start the week to within 1.5% of the 52-week lows set a week ago.
Long term investment grade bonds and US Treasury securities also revisited lows from 9/27/22, coming within pennies of those benchmarks.
30-year yield for UST is back up to 3.86%. It was 3.87% on 9/27. At the beginning of 2022, yield was a paltry 2.01% by comparison.
UK gilts are experiencing the same action despite the Bank of England intervening to buy bonds.
The bond crisis is not over.
With yields soaring across the board no one wants to own the lower paying outstanding issues, which are legion, destroying their value.
But everything in the global economy is based on those, piled up in earnest after The Great Financial Crisis of 2008, and in orgiastic frenzy afterwards during the late pandemic.
Bond yields in 2022 are telling you that they are overvalued by 92%.
Stock market valuation is telling you a similar thing.
From 1938 through 2019 the median ratio of the S&P 500 to GDP is 81. In 2020 we averaged 154, or 90% overvalued.
This is the major deflationary headwind facing the world, the other side of the COVID-19 inflationary shock coin.
Push here, it comes out over there.
Modern central banking cannot escape this conundrum any more than the gold standard could.
The only thing the individual can do in this situation is to owe nothing and save everything, preferably in your hands.
Good luck.
The Fed is all talk about combating inflation, no action.
Because the top 10% of the country has 89% of the money that way, dummy.
True populism would throw the bums out and end The Fed, but we haven't got any.
The effective federal funds rate stands at 2.33% and $8.85 trillion remains on the balance sheet while Powell makes speeches.
Borrowing is still very cheap for the big boys and the Fed's finger on the scale makes it impossible to know the true value of its mortgage backed securities and US Treasuries.
Meanwhile inflation rages at 8.5% in July.
The market "rout" is merely another yawn as Americans get punished at the grocery store and the gas station.
Current GDP of $24.883 trillion, reported 8/25, implies a fairly valued market level of around 1,600 not 4,057. The S&P 500 remains 153% above that.
They remain rich, and you remain . . . the reason why.
At this rate it will take only 22 more years and Jerome Powell will be 91.
You can't make this shit up.
AP Obama, here:
Inflation in the United States, which had been under control since the early 1980s, resurged with a vengeance just over a year ago, largely a consequence of the economy’s unexpectedly robust recovery from the pandemic recession. The rebound caught businesses by surprise and led to shortages, delayed shipments — and higher prices.
Inflation averaged 4.75% 1981-1990 inclusive. You can't call that "under control". The FedFunds rate averaged 9.4% over that same period. The one halved your nest egg in about 15 years while the other halved what was left in 7.5.
If that's success I'd hate to see failure.
While the Fed fiddles around with interest rates as if they controlled anything, oh look! over there! a deer!, it has presided over an orgy of balance sheet expansion of $7.7 trillion since 2008 as the Treasury has flooded the economy with $1.5 trillion in new currency and the Congress of idiots has spent us blind with $15.75 trillion beyond the 2008 baseline ballooning the total debt to $30 trillion by the end of 2021 so that it's three times the size that it was just 14 years ago.
An economy which runs only on going deep into debt is not a capitalist economy.
It's a Chinese communist economy.
