Presenting the Fed’s Perfect Plan for U.S. Dollar Oblivion https://bestevidence.substack.com/p/presenting-the-feds-perfect-plan

KANSAS CITY FEDERAL RESERVE - Jackson Hole, WI Paper From Summer 2023 https://www.kansascityfed.org/Jackson%20Hole/documents/9726/JH_Paper_Duffie.pdf

As a reminder to viewers, the last time a Jackson Hole paper gave rise to a major monetary shift was in 2019, when BlackRock presented a paper entitled, “Dealing with the Next Downturn.” As luck would have it, the title downturn arrived the very next month in the form of a huge repo crisis that was shortly thereafter followed by the rollout of Pandemic!!! Crucially the Fed’s response to these shock events—creating $5T in new reserves PLUS $5T in new bank deposits, in accordance with BlackRock’s paper—represented a material departure by the central bank from its response to the GFC in 2009; back then, the Fed was acting to bail out the banks, which it did by creating, say, $2T in new reserves without any need at all for new bank deposits.

To summarize: • 2009—no new bank deposits created by Fed, no inflation. • 2020—Fed creates $5T of new bank deposits, gets big-time inflation. • HUGE difference.

Flash forward to the recently-adjourned Jackson Hole meeting. There is one particular paper that, if implemented, would cause huge inflation and indeed piggyback on and turbo-charge the inflation that’s arisen from the Fed’s implementation of BlackRock’s 2019 paper. The new paper does answer, however, the question of how the monetary powers that be appear to be planing to deal with the exploding interest payment on the national debt, and that's to print more interest-bearing pseudo debt-money. Which is to say: in the worst way possible.

Presenting the Fed’s Perfect Plan for U.S. Dollar Oblivion https://bestevidence.substack.com/p/presenting-the-feds-perfect-plan

Jackson Hole, WI Paper From Summer 2023 https://www.kansascityfed.org/Jackson%20Hole/documents/9726/JH_Paper_Duffie.pdf

As a reminder to viewers, the last time a Jackson Hole paper gave rise to a major monetary shift was in 2019, when BlackRock presented a paper entitled, “Dealing with the Next Downturn.” As luck would have it, the title downturn arrived the very next month in the form of a huge repo crisis that was shortly thereafter followed by the rollout of Pandemic!!! Crucially the Fed’s response to these shock events—creating $5T in new reserves PLUS $5T in new bank deposits, in accordance with BlackRock’s paper—represented a material departure by the central bank from its response to the GFC in 2009; back then, the Fed was acting to bail out the banks, which it did by creating, say, $2T in new reserves without any need at all for new bank deposits.

To summarize: • 2009—no new bank deposits created by Fed, no inflation. • 2020—Fed creates $5T of new bank deposits, gets big-time inflation. • HUGE difference.

Flash forward to the recently-adjourned Jackson Hole meeting. There is one particular paper that, if implemented, would cause huge inflation and indeed piggyback on and turbo-charge the inflation that’s arisen from the Fed’s implementation of BlackRock’s 2019 paper. The new paper does answer, however, the question of how the monetary powers that be appear to be planing to deal with the exploding interest payment on the national debt, and that's to print more interest-bearing pseudo debt-money. Which is to say: in the worst way possible.

Presenting the Fed’s Perfect Plan for U.S. Dollar Oblivion https://bestevidence.substack.com/p/presenting-the-feds-perfect-plan

Jackson Hole, WI Paper From Summer 2023 https://www.kansascityfed.org/Jackson%20Hole/documents/9726/JH_Paper_Duffie.pdf