A Brief History of the Past 10,000 Years of Monetary Policy and Why Last Week Was a Big Deal

[g5000]

A Brief History of the Past 10,000 Years of Monetary Policy and Why Last Week Was a Big Deal - Epsilon Theory

What we saw happen in the UK last week is the first shock, not the last, and all the massive pension funds and asset owners who have turned themselves into shadow hedge funds, full of swaps and leverage through the sweet whispers of Wall Street Wormtongue, will be our undoing. Read more

www.epsilontheory.com

This is one of the most cogent, simplified discussions on monetary policy I have ever read. Outstanding read.

Many years ago, I wrote a topic about the Federal Reserve's Bond Bubble Doomsday Machine. Much of what the author of the article says connects to what I said in that topic. It just took a lot longer for the bubble to start deflating than I anticipated.

But as John Maynard Keynes once famously said, "Markets can stay irrational longer than you can stay solvent."

Though the article is long, it is well worth reading the entire thing before commenting.

Or you can just blame Biden and/or the Jews.

The Fed's Bond Bubble Doomsday Machine

When you buy a bond, you are making a loan to the issuer. That bond is money owed to the buyer, making it an asset. When the Federal Reserve buys a US Treasury bill, note, or bond, it is making a loan to the federal government because the federal government has appropriated more spending than...

www.usmessageboard.com

 

[g5000]

Excerpt:

For the past 30 years, central banks have kept interest rates artificially low, first through option 1 and more recently (since the Great Financial Crisis in 2008-09) through options 2 and 3. And because of the inverse relationship between interest rates and the price of the bonds themselves, everyone’s investment portfolios were kept artificially high and the people with money got richer at a faster rate than the people with businesses grew their businesses. Wheee!

Central banks were able to do this (keep the price of leverage, aka interest rates, artificially low) without creating massive inflation because international capital flows to build factories and make stuff in countries with cheap workers (“globalization”) kept wage inflation and goods inflation low, and governments didn’t go completely crazy with giving away money for people to spend. Until the pandemic, that is, when globalization ended and governments went completely crazy giving away money for people to spend, and we all knew that we all knew this was the case, and so inflation erupted all over the world. So now central banks can’t keep the price of leverage artificially low, even though the amount of leverage sloshing around in the world is historically, insanely high.

 

[Bob Blaylock]

But as John Maynard Keynes once famously said…

By applying Keynes' economic theories to physics, I have invented an unlimited source of free energy.

 

[Gabe Lackmann]

By applying Keynes' economic theories to physics, I have invented an unlimited source of free energy.

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Ahhh...socket priming?

 

[g5000]

By applying Keynes' economic theories to physics, I have invented an unlimited source of free energy.

I am not a Keynesian. I subscribe to the economic thinking of Milton Friedman.