Posted on 01/13/2022 5:10:48 PM PST by blam
Pay off debts, of course.
Never said that it would be a reality - just letting folks know of the important concept that paying off debt reduces the money supply in the amount of the paid off debt (assuming it's bank-owned debt).
The Fed bought corporate debt that was worthless - bad loans. They bought this debt at face value - acting like it was AAA rated.
Nobody will buy it now. It has no value. It's safe enough on the Fed's balance sheet - but there's no way to disburse of it going forward.
Oil didn't skyrocket in 2008. In fact, in the economic newsletter I was writing back then I forecast oil to drop to $30.
A complete unwinding of all debt would result in zero money. Not saying it would happen - just showing the mathematical fact.
The Fed is holding a lot more than bonds right now. They're also holding corporate debt - they never had done that.
Pay off debts, of course.
There is more savings than debt. Of course.
When? How much?
That's exactly why they can't and won't. We're seeing price inflation in the face of monetary deflation.
They won't raise in that scenario - unless they're blooming idiots that want to destroy our markets (that are unhealthy to begin with).
One of the largest problems we have right now is taking out bank loans (creating new money) and directly putting that money into equities. Nothing is tangible in that scenario. It does nothing but create an enormous balloon that will pop at some point. There's no getting around it.
You haven't read the link I posted from the Bank of England.
Your premise is a faulty one.
I heard you the first time. So you can't explain how or why my $20s would go away.
I posted the link to the latest H.4.1 report. It's trillions of bad debt, being held as bank reserves.
In return, the Fed gave the institutions that originally owned the toxic waste newly created money - represented the full face-value of the toxic notes.
I actually explained it quite clearly.
Meanwhile, you throw out your single sentences that fail to disprove what I've been saying.
You work for the banking sector? You seem very defensive of it.
I don't need to read the entire paper to know that savings are larger than debts.
I always look forward to these exchanges.
As far as I can see, all the corporate bonds from the COVID programs are gone. They were never close to $1 trillion, let alone multiple trillions.
Page 6 of the H.4.1
$2.6 trillion in MBS
Doesn't look like government debt to me.
“It’s trillions of bad debt, being held as bank reserves.”
So why is that a problem? What effect does it have?
“$2.6 trillion in MBS”
Sounds like Mortgage Backed Securities. Is that Fannie and Freddie paper?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.