Fed cuts rates

One consequence was visible on Wednesday. The Fed raised the target range for its benchmark rate by a quarter point to 1.75 percent to 2 percent, but only increased the rate it pays banks on cash held with it overnight to 1.95 percent. The step was designed to keep the federal funds rate from rising above the target range. Previously, the Fed set the rate of interest on reserves at the top of the target range.

Treasury got a rate cut relative to banks. The Fed has cut rates for Treasury at least twice since starting its fake rate hike schedule.

It is a rate cut for congress because their seigniorage stream is increased. If this were a true flexible corridor, the Fed would hold gains and  losses, not pass them onto treasury.

We probably should look a his as a three color pit with the pit boss going and keeping near zero bit error.  The assupion, there in, is that binding trade space is always available, the pit boss is always positive definite and can shed positive error onto treasury.  Not quite so, they neglect currency risk which still exists and government continually loads up as insurer of last resort.  Introducing currency risk in this system implies the seigniorage stream need be independently bet by congress,they have to strategize their gains. Then we get the three way, uncertain queues, the spreadsheet balances the three and allocates currency  risk on the spot.

The three way queue balancing generates a solid tradebook error, there is no government implied insider information, it is all priced. Then everyone agrees on how large a single quant is, they bet their insider information optimally. They will be algebraic over bit error, have points of symmetry, places where voters, taxpayers, contractors can all reference risk. No one sees an obvious gain from scam.

The result of this  machine, the very definition of it, hits the current traders as a  great and fair system. They can price our devaluation through this machine. The outlook is not as bad as the super crash. Traders see the gains in efficiency yielding good outcomes even with probability of modest defaults. We don't need to attempt a jump across the concavity.