Any serious investor, curious souls, learners would be well served to read this amazing summary from the Shrub and then go read the full piece from Stephen....well done - again! Please keep up the writing - is tremendously valauble to many IMO....
In Theory CBs sets the Monetary Policy by short term interest rated through the long end. CBs should be independent from Gov (Treasury) and their mandate is price stability (and labor market in US).
Some might be well served to listen to Andy Constans take. With Q1 being the high revenue period, it's completely plausible that bond issuance holds pat and t-bill issuance goes WAY down. Of course that would ruin these fantasies that Yellen, who takes what? 4 to 6 actions per year, runs the entire US financial market and economy.
Been saying this for some time. It still is very dangerous for the Treasury to have this much power. If she steps up coupons (I think she will) then that will be the new level going forward and at some point issuing $2T of coupon bonds a year to fund the spend we just had will hit asset prices in a significant way for no other reason as to crowing out equity investments
Very helpful. I still have a question - if RRP outflows go into funding Treasury bills, they still end up in Fed Balance sheet in the TGA account. In other words, those transactions are Fed Balance sheet neutral. Why then the assertion that the Fed is forced to taper QT faster than they would have liked?
Here's the thing, history shows that when political animals, like Tamagotchi Yellen, find a lever of power that works for them, they never stop playing with it until it no longer works. look for many more bills to be issued in Q2
Any serious investor, curious souls, learners would be well served to read this amazing summary from the Shrub and then go read the full piece from Stephen....well done - again! Please keep up the writing - is tremendously valauble to many IMO....
Brilliant! Thanks for the cliffnotes for those of us who suffer deeply from ADHD
I am not good with politics, so can anyone explain to me why Treasury to set monetary policy is extremely dangerous. Thank you.
In Theory CBs sets the Monetary Policy by short term interest rated through the long end. CBs should be independent from Gov (Treasury) and their mandate is price stability (and labor market in US).
Some might be well served to listen to Andy Constans take. With Q1 being the high revenue period, it's completely plausible that bond issuance holds pat and t-bill issuance goes WAY down. Of course that would ruin these fantasies that Yellen, who takes what? 4 to 6 actions per year, runs the entire US financial market and economy.
a more nuanced version than helicopter Ben ..
but no less nefarious
Been saying this for some time. It still is very dangerous for the Treasury to have this much power. If she steps up coupons (I think she will) then that will be the new level going forward and at some point issuing $2T of coupon bonds a year to fund the spend we just had will hit asset prices in a significant way for no other reason as to crowing out equity investments
This is genius
would be something if a heavy bond market into the announcement forces here to try to save it again
Very helpful. I still have a question - if RRP outflows go into funding Treasury bills, they still end up in Fed Balance sheet in the TGA account. In other words, those transactions are Fed Balance sheet neutral. Why then the assertion that the Fed is forced to taper QT faster than they would have liked?
Question: why does lower RRP necessitate tapering of QT?
Here is a nice chart by Bob Elliot how QRA has been moved markets: https://x.com/bobeunlimited/status/1750865118705926505?s=46&t=geUoxosnvtZIyYuJjjld4Q
Why Yelen has so much power (over Powell/FED) and from where is she sourcing such power?
Here's the thing, history shows that when political animals, like Tamagotchi Yellen, find a lever of power that works for them, they never stop playing with it until it no longer works. look for many more bills to be issued in Q2
nice share Le Shrub
Little known fact: Tamagotchi Yellen and Samurai Belushi are fraternal twins.
They had to be separated because they repeatedly attacked each other with steak knives.
https://www.facebook.com/watch/?v=730832198596156
Nicely put together Mr Shrub. Politics is a dirty business, everyone wants control over the largest budget in the world.