After years of thinking the #FederalReserve is evil, I got a job at a hedge fund full of fellow ex-physics & math nerds, & spent several years digging into the financial system& #39;s plumbing.

Here& #39;s how my understanding has evolved, expressed as a series of three meme-like objects.

(1/3) Here& #39;s how we tend to think things work, based on the brrr memes and the common understanding of Quantitative Easing (QE), aka, the money printer that supposedly goes "brrr."

(Note: the yellow dollars are treasury bonds, and the green dollars are dollars.)

(2/3) Here& #39;s a closer approximation, reflecting the fact that QE is an asset swap where the Fed gives bank reserves in exchange for treasuries. Bank reserves can never leave the inter-bank system. They can& #39;t be used to buy groceries. Or anything. They& #39;re basically a digression.

(3/3) Here& #39;s my current understanding (omitting details). Something in the government is most certainly going brrr. Lots of brrr. But it& #39;s not clear that noise is coming from the Fed. The Fed may, in fact, be a (largely irrelevant) pineapple factory.

Here& #39;s a clip conveying the same essence as the memes.

It& #39;s @JeffSnider_AIP and @LynAldenContact (both worth a follow) on The Rebel Capitalist Show.

Watch 5:55 - 8:20 here: ">https://youtu.be/B4xcCO9v-...

I made the 3 pictures above once I realized what a tangled mess this all becomes when we try to describe it in English. Citation: that video clip right above.

In summary, macroeconomics is a fun science, because no one knows shit. It& #39;s great. It& #39;s like doing physics back in the early 1800s.

Now share this with your friends so they can come tell me why the memes are wrong & help me correct the pineapples.

#EndTheThread #EndTheFed https://abs.twimg.com/emoji/v2/... draggable="false" alt="❤️" title="Rotes Herz" aria-label="Emoji: Rotes Herz">