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's plumbing.

Here's how my understanding has evolved, expressed as a series of three meme-like objects.

(1/3) Here'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'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't be used to buy groceries. Or anything. They're basically a digression.

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

Here's a clip conveying the same essence as the memes.

It's @JeffSnider_AIP and @LynAldenContact (both worth a follow) on The Rebel Capitalist Show.

Watch 5:55 - 8:20 here:

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's great. It'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