Caleb James DeLisle on Nostr: Reading between the lines here, there is something to this. All of the major banks ...
Reading between the lines here, there is something to this.
All of the major banks are insolvent if you mark their assets to market.
Raising interest makes people pull their money out of bank accounts and put it in treasuries because it yields better.
Cutting interest apparently causes treasuries to get dumped, which drives the yields up as well. I don't know the mechanism of this, but it happened recently when they cut the FED rate and the actual rate increased.
So extend-and-pretend would mean major bank failures, which forces the hand of the government to make everything right, which requires borrowing a few more trillion dollars, which causes yield rates to increase even further while inflation comes back with a vengeance.
All of the major banks are insolvent if you mark their assets to market.
Raising interest makes people pull their money out of bank accounts and put it in treasuries because it yields better.
Cutting interest apparently causes treasuries to get dumped, which drives the yields up as well. I don't know the mechanism of this, but it happened recently when they cut the FED rate and the actual rate increased.
So extend-and-pretend would mean major bank failures, which forces the hand of the government to make everything right, which requires borrowing a few more trillion dollars, which causes yield rates to increase even further while inflation comes back with a vengeance.