Read on Twitter
(cont'd)
25/ But, say you, why not simply monetize the debt and avoid all this nonsense? Well, a proper answer would likely require ia separate thread, but let’s just say for the sake of brevity:
25/ But, say you, why not simply monetize the debt and avoid all this nonsense? Well, a proper answer would likely require ia separate thread, but let’s just say for the sake of brevity:
26/ In every case where a government has directly monetized debt, it has led to swift and total currency destruction and lots of human pain. Central Bankers know this, and they’re not sociopaths.
(yes, I am aware some of you think otherwise)
(yes, I am aware some of you think otherwise)
27/ But the simple truth is that the Fed has very little incentive to light a system that they are at the apex of on fire.
They also need the banks to be participants in whatever they do.
They also need the banks to be participants in whatever they do.
28/ And because of Banks’ longer time horizon, it’s unlikely they would be willing participants in anything that simply sets the current system on fire.
You know: the system that’s their entire livelihood.
Like, say, monetization of government securities.
You know: the system that’s their entire livelihood.
Like, say, monetization of government securities.
29/ But wait -- if there’s no monetization, how does inflation keep happening?
Well, it’s like we talked about: the banks’ *capacity* for credit keeps increasing incrementally across credit cycles and long time frames (via growing reserves).
Well, it’s like we talked about: the banks’ *capacity* for credit keeps increasing incrementally across credit cycles and long time frames (via growing reserves).
30/ And since credit is how we make more money, the aggregate potential for money creation does, indeed, steadily increase over time.
But without monetization, it’s just not ever going to be hyperinflation.
But without monetization, it’s just not ever going to be hyperinflation.
31/ Which is why our pal Jerome keeps chatting about the intended rate of change (2% or whatever) - he wants to set expectations about what their policies are intended to create.
Because stability is a net good.
Because stability is a net good.
32/ So yeah, you should probably have some “hard money” — gold or BTC or property or whatever. Keep it in your desk to look at; deed it to your grandkids.
It will, indeed, hold value over longer time periods (probably, do your research, etc).
It will, indeed, hold value over longer time periods (probably, do your research, etc).
33/ But please - let’s stop breathlessly saying that you gotta buy it RIGHT NOW. That’s just a flat out lie. Just buy whenever it seems cheap, or every now and then.
Also: please, please take note of what the OMG THE HYPER IS COMING BUY NOW people are trying to sell you…
Also: please, please take note of what the OMG THE HYPER IS COMING BUY NOW people are trying to sell you…
34/ Banks are, indeed, going to slowly increase the money supply through the growth of lending capacity.
Frankly, it’s a bit tough for them to figure how to keep growing it at the moment, but they are very smart and they’ll find a way.
Frankly, it’s a bit tough for them to figure how to keep growing it at the moment, but they are very smart and they’ll find a way.
35/ And they probably (!) won’t break the whole system trying. They understand the risks better than you do and breakage does them no good
They are the redwoods of our financial forest, and their canopy has stretched over us since long before you were even a sapling.
They are the redwoods of our financial forest, and their canopy has stretched over us since long before you were even a sapling.
36/ Thank you for reading.
I apologize for this being so long.
I will now retire to my quarters as I prepare to be called a “sheeple” by the entirety of the internet until the inevitable heat death of the universe puts me out of my misery.
I apologize for this being so long.
I will now retire to my quarters as I prepare to be called a “sheeple” by the entirety of the internet until the inevitable heat death of the universe puts me out of my misery.
