Picking Apart Fed Policy
Hey Jessocialists
I took the time to listen to the latest BS from the fed, so you don't have to, its all technical lip service and means business as usual, but I thought it would be fun to debunk what was said because for someone who reads up about economics it's hilarious.
Lol and trust me it wasn't hard, it's pretty blatant for anyone who understands economics. So while most people don't, I thought it would be essential to pick apart the narrative projected on us by the Federal Reserve.
Why do I care what America does with their policies? I'm in Africa, well since the world decided the best way forward would be to peg everything to the dollar, the rest of the worlds central banks are smaller versions that mimic what the others do, its a hive mind. So if the US does something, you can be sure the rest will follow a similar path.
Competitive devaluation
When you all pegged to a falling rock, everyone gets dragged down with you, and with a debt-based fiat economy, it's a race to who can obliterate their currency first. This is what we have to do to keep the debt bubble from imploding. Inflation is the only weapon since we've gone past the rate of repayment through higher interest rates.
We've broken the zero bound in some countries, and while the US refuses to go negative, they are trying something else, a financial trickery if you will.
The reason the US and many countries have low-interest rates is that they have to keep it artificially low or the debt payments on things like government debt, corporate debt and household debt would balloon and people would either default.
This would destroy debt, bring about deflation and massive depression. By keeping interest rates low, people can service their repayments and on top of that with added debasement through inflation; they can use cheaper dollars to pay back the debt.
The need for more inflation
So the central banks are keeping interest rates low artificially to try and keep the economy going, they now have nowhere to go apart from increasingly negative. So what is the fed proposing? They want to run the economy hot, over 2% inflation, you see the more inflation they have, the more room there will be to increase interest rates nominally.
SO let's say inflation rises to above 2% then the Fed has room to raise interest rates to try and pretend that they are raising interest rates but instead they're just destroying your purchasing power to do it.
Yet we peg back interest rates
So why not just let interest rates rise in the first place? My point exactly, they can't. They can only raise it by the amount of inflation they create so its financial trickery and not a healthy economy increasing their interest rates.
Bitcoin benefits
In a world where interest rate hikes are only nominal and based on the gap between the amount of inflation, they can create this is a super bullish environment for Bitcoin. It just means more capital rushing into the market each year into an asset that gets more scarce each year.
It's as if the Fed and central banks are doing everything to ensure Bitcoin dominance at this point. It may not seem like it now but this over 2% inflation target in one of the biggest market cap economies + the knock-on inflation we'll see from other central banks that copy this strategy will continue to show dividends for Bitcoin.
Have your say
What do you good people of HIVE think?
So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."
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Looking at the economy nowadays is sadly hilarious. The way people's lives will be affected is troubling. That is why financial education is so important so that the young generation now would not repeat their parents' mistakes.
P. S. The look on his face in the picture.. 👀🙈😂
Lol I think at this point it’s about making things as confusing as possible so no one asks questions and goes okay clearly this is way to complicated for people to understand and we shouldnt try and that when it explodes you can’t be mad because well it’s such a complex thing so it covers the butts! No one wants to take the blame
As for your point on financial education no one wants it as someone who is trying to learn and teach others I feel people like the safety of ignorance as if because I don’t understand what’s coming I am protected it’s weird
LOL it’s hard work printing money out of thin air you know Jermone Powell is really grinding it out lately
Educating people is the only way to make them see things differently
I agree but people must want to be educated, like for me the only reason I know this thing is because I wanted to learn what was going on because something didn't sit right with me and I thought I needed to find out. I've tried talking to people about it but as soon as I try people shut off so I don't try
Educating people is never an easy task. It demands the patience of a monk
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Thanks for todays Reading. / Jessie
If only more Swedes read my work and sent me fake internet money for it I would never have to have a job again lol
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.People think who we have no inflation in the U.S. haven't bought food or had to pay a health care bill, we send our inflation to other countries and that's why gold has been higher in all other countries. also the inflation hides in stocks and real estate, the commodity charts don't matter by the time it makes it to your kitchen table.
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That is true the rest of the world pays for the US to live above their means! But I think inflation is hard to calculate because a lower income person buys and owns different things than a high income person!
Like you say the stocks and real estate push higher as banks tend to lend freely to real estate and companies with the help of added QE reserves
There is a lot of inflation in the US but people also don’t see it because it’s consistently fighting deflationary forces too! Prices of goods and services should be coming down as we become better at it
Labour costs have been flat so you’re not paying workers that much more! I am pretty interested to see how far they can take this system before it breaks or will they start adding release valves like UBI and blowing out to the general public
True, the cost of labor goes up for small business with workman's comp premiums, and if they pay for health insurance too. Now everyone is pushing for 15 dollar min wage, that will raise prices even more.
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Exactly people don't understand supply and demand and margins, sure we should pay people a living wage but that's a slippery slope the more money you give labour the costly goods and services become because people companies are just going to pass on the cost to consumer so you earn more but eventually you back at the same place where you can't afford it.
I am not saying this is a simple fix, you can't patch a system that is systematically broke from the top. You don't fix manipulation with more manipulation, you just stop the manipulation