This post pertains to the actions of this alleged human:
I have been reading about this year’s big political drama surrounding the debt ceiling, and in particular, how the “emergency measures” of the US Treasury will be implemented to stave off the day of reckoning. Simply stated, if the Treasury did nothing, and simply allowed the debt ceiling to be reached (as it was last week), the government could no longer borrow any more money. In turn, means the whole damned thing shuts down, because our government desperately needs to borrow trillions of dollars constantly to stay afloat. Without ceaseless bond sales, the US Government is a goner. Just imagine – – no more Internal Revenue Service! How would we survive as a species?
The good news, of course, is that the Treasury has no compunction engaging in extraordinary measures, as they like to phrase it, in order to give themselves about eight to nine months of breathing room. I won’t go into the nitty-gritty of it. If you’re a masochist, feel free………..
From the articles I’ve read – – and this is surely the most depressing thing I’ve read in months – – – Yellen’s actions, by way of accounting gimmicks, are going to provide hundreds of billions of dollars of fresh liquidity for the “markets“. In other words, it’s back to the same old horseshit again, in which liquidity – – a word I’ve learned to despise – – is going to inflate asset prices like air being shoved into a balloon, at least until such time as the debt ceiling is resolved, as it always is, with God-knows-what consequences. Sadly, that day of reckoning might be months and months away.
We’re already seeing the reverse repo start to shrink in light of these developments……
…..and the balance sheet, which is said Yellen will drain to $0, also start shrinking rapidly (which, through the crazy mechanics of the market, will actually provide the aforementioned liquidity).
And, thus, if you look at the crazy “Fed Spread” formula of (((FR:WALCL-((FR:WTREGEN1000)+(FR:RRPONTSYD1000)))/1000)/1.1)-1625, it would indicate the shrinkage of the Fed balance sheet will indeed push the S&P higher and higher. Great. Just what I want to hear.
I mean, honest to God, I remember in the late 1980s when I was first getting into stocks reading the Peter Lynch tale about how his wife loved L’eggs pantyhose, and he found out the company that made them and bought a bunch of its stock just based on that. The general idea being, of course, that companies making popular products are great investments.
What we have these days, instead, is the requirement to calculate the “flow‘ from the U.S. government’s debt and anticipate its effects on the equity “markets”. The insane levels of 2021, which were demolished and created trillions of dollars of loss for investors, have already been forgotten, and we’re about to endure this same crap again. How I yearn for an organic market once more. I guess it’s gone for good.
