FED unlikely unlikely to unwind balance sheet?
⠀⠀⠀⠀⠀⠀⠀⠀⠀
What does this mean and what path did we take to get here?🛤
⠀⠀⠀⠀⠀⠀⠀⠀⠀
After the #financial #crisis of #2008, the #federalreserve loaned the #US government $4T💰. The Federal Reserve received US bonds (I-O-Us) from the US treasury and the US Treasury received cash that the Federal Reserve printed🖨 out of thin air💭.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This infusion of #cash💸 into the economy helped stimulate a recovery, but not a #natural one; one fueled by government #debt. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
Keep in mind that the government pays its debt with taxes...that it collects from its citizens👨👨👧👦. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
10 years later and the Federal Reserve🏛 is supposed to begin selling its US bonds (I-O-Us) to get paid back and take its $4T💰 in cash back out of the #economy🌐...at least that’s what they were saying.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Today however, the Federal Reserve 🏛 backed off its original plan to definitely sell its US #bonds and it is looking likely that it may never take the $4T it printed🖨 back out of circulation🔄.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This #news📰 comes one month after the stock market📉 had its worst #december since the #greatdepression and would have been worse if the Federal Reserve did not come out and say it would slow down its #interest rate hikes.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Reducing interest rates is another way that the Federal Reserve🏛 can temporarily stimulate the economy. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
It is looking very likely that our #economy🌐 is very dependent on borrowed money and low interest rates. This #monetary #policy was supposed to be a temporary stimulus not❌ a long term solution. ⠀⠀⠀⠀⠀⠀⠀⠀⠀
This situation can only end 1 of 2 ways...
⠀⠀⠀⠀⠀⠀⠀⠀⠀
- The Federal Reserve increases interest rates to a normal level and sells its US bonds causing a major #recession and collapse of the #stockmarket 📉.
- The Federal Reserve 🏛 continues its low interest rate policy and continues to #INFLATE the money supply, which will reduce the value of the US dollar, making all of the things US citizens buy much more #expensive.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Because of #political #egos the more likely scenario is #2 since no administration wants the economy to collapse while it is in office.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
#Bitcoin is immune to this type economic #manipulation
⠀⠀⠀⠀⠀⠀⠀⠀⠀