Your argument might have some merit if they were responding to upward pressure on rates across the term structure. But they’re not - only to the overnight repo rate which is pushing the Fed Funds rate OFF TARGET. Not responding would be akin to a FF target rate hike.
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There is nothing inherently nefarious about “monetizing debt.” Monetizing debt is how CB’s create money. It is literally their raison d’etre. In a rate-targeting regime the relevant question is the propriety of the targeted rate, not the quantity of monetizarion needed to hit it.
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"The relevant question is the propriety of the targeted rate, not the quantity of monetization needed to hit it." Exactly. Not that it makes me want to own USTs... :)
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Y’all are obsessed with money supply while ignoring money demand. Supply well in excess of demand = collapsing currency = Weimar. Supply to meet increasing demand = stable (strong in this case) currency = normal operation of monetary policy. Strong USD contradicts your thesis.
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Read the history books. Throughout Weimar, there was consistently a shortage of currency, which was why they kept printing it. The entire time they were "just meeting demand" Strong USD does not contradict thesis at all if you understand the "order of operations" for USD mkts
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Luke, you
#NailItHere
. I see the same game plan today between the recent actions of #JayPowell propping up UncleSam with his "Not-QE" as did Rudy Von Havenstein in 1923. As Rana Foroohar aptly explains Luke's point here https://www.ft.com/content/1377e5ba-0bba-11ea-b2d6-9bf4d1957a67 …#TheFedWillDebauchTheUSDpic.twitter.com/b5rQLPYUnI
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Luke, Do you know what the interest rates were in Wiemar? If they did the printing with high interest rates, then this would line up perfectly with the Hussmann paper.
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I view Fed activity as monetizing the deficit/debt because for years they’ve hoarded massive amounts of bonds, and are now buying large amounts of shorter term stuff. I, along with many others, would love to buy Treasuries at a market rate, but we’re not allowed to
Hvala. Twitter će to iskoristiti za poboljšanje vaše vremenske crte. PoništiPoništi
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Hvala. Twitter će to iskoristiti za poboljšanje vaše vremenske crte. PoništiPoništi
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