Fed follows the one year treasury

Always has, always will.
That is its job.  Covid slammed the one year rate down.

The Fed did raise central bank taxes, that is also its job.  But it is causing a rebellion.

The government only gets a half point subsidy on its debt held, currently, but debt held has doubled.   Soon buying the long government bond becomes the best bet for other banks, as they cannot buy stocks.     The yield curve tells me that no on is planning any real private sector planning for the next five years.

The tax, about a 100 billion a year, is some 2000 dollars per year for the lower middle class, do the division.  That tax is applied at the retail banking level, and banking accounts become unaffordable.  So then banking continues to roll up until the middle class get hit with the bill. Once the middle class refuses to pay, then the Fed is stuck, maxed out its tax collections. Congress is stuck, they have to default on their obligations, and so does California, Illinois and New York.

Basically it is a slow stop, but gets recognized early and the default tends to be abrupt.  It need not be abrupt, there is a sound deal, a New Fed contract we can do and come out ahead, not behind.  But is all depends on getting at least six small state governors with brains. Make them see the huge pay off, they become wealthy, as long as they are small. The economy will recover, suffer 4-5% inflation for a few years, but we will be right back here in 15 years and we can execute the same marvelous result. Try for half the volatility of Nixon.

I join the Antificants

We need the antificants, I will join if they give me economic adviser, I can be the new Hamilton. But the Antificans have to understand there is no new philosophy, no Godot, we are just a bunch of kids and we know how to remove half the volatility of the last cycle. We can tax the rich, no problem, I can figure that one out. So this is a bit of anarchy until the boomers fold or die of covid, then it is us kids and we are slightly better because we have better tools. And we got Redneck U.


Our motto. This time is slightly less volatile then last time, or we will destroy the place.