Welcome to General Chat - GAW Community Area
This General Chat area started off as a place for people to talk about things that are off topic, however it has quickly evolved into a community and has become an integral part of the GAW experience for many of us.
Based on its evolving needs and plenty of user feedback, we are trying to bring some order and institute some rules. Please make sure you read these rules and participate in the spirit of this community.
Rules for General Chat
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Be respectful to each other. This is of utmost importance, and comments may be removed if deemed not respectful.
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Avoid long drawn out arguments. This should be a place to relax, not to waste your time needlessly.
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Personal anecdotes, puzzles, cute pics/clips - everything welcome
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Please do not spam at the top level. If you have a lot to post each day, try and post them all together in one top level comment
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If you find people violating these rules, deport them rather than start a argument here.
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Feel free to give feedback as these rules are expected to keep evolving
In short, imagine this thread to be a local community hall where we all gather and chat daily. Please be respectful to others in the same way
Rules For the rest of the Site also accessible on the sidebar.
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This was not an official action, and hence you cannot find official info on this.
Based on the NDAA 2020, there was analyses that federal reserve was effectively under the control of Treasury due to some of the complex clauses that was part of the NDAA. This was purely theoretical. And you are also partially right about it being other way around as well. There were programs that Fed was allowed to lend money with Treasury taking the first loss risk.
So a better way to characterise this was that Fed and Treasury / fiscal and monetary policies became more interdependent rather than staying traditionally independent. Was this a good thing? Was this a bad thing?
The answer is in the result we see. If you follow people like Tom Loungo, you will see that the Fed (and Powell) have done exactly what Trump needed up until this point.
For instance, holding the rates high this long has affected the European Central Bank and Bank of Japan making dollars more expensive for their balance sheet while not having much impact domestically contrary to the expectations.
Tom goes on further to make the point that Fed was a powerful weapon that instead of neutralising right away, Trump turned it against the City of London itself and at the same time made its traditional role of controlling the economy via interest rates obsolete.
Also from the Fed's balance sheet point of view, it has been steadily reducing its asset holdings and started buying up US Treasuries by the millions. This is the only reason USD has not crashed even though countries like China have started dumping their dollar holdings.
So Fed went from holding assets to holding debt. If US defaults on its debt, Fed will be the one that will have to swallow the pain.