The British people are resilient and very smart so the government reacted quickly. The UK with the decline of North Sea oil and gas have been heading down a path where energy costs threaten their jobs and high quality of living they have enjoyed for decades. Energy subsidies government spending tax cuts to rich and businesses the list and playbook by governments have only one play. And so happy to hear they won the first street battle. Not financial advice.įascinating to hear the term bond vigilantes. These are tidal currents, and they change direction with the tides, and you know this ahead of time and can plan accordingly. To survive, you must try to get out of the current.īut to not put your life at risk, you should plan your swim to where you don’t have to go against that kind of current, or cross than kind of current, but where you can go with the current or against a much slower current that you can handle. If you try to swim against that kind of current, you’re screwed, you’re going backwards, and you’ll never get there. In the San Francisco Bay, tidal currents can be 4 knots, 5 knots, and more. A good distance speed that swimmers can maintain for miles is about 2.5 to 3 knots, maybe a little more for top swimmers, about easy walking speed. You have to keep swimming, so you cannot sprint and exhaust yourself. In open water, there is no end of the pool where you can just stand up and rest. And Long-Term Interest Rates cannot be described as “moderate” when they’re below inflation!Ĭlearly, Warren doesn’t have a lot of experience swimming in open water with currents. Stable Prices became “transitory” inflation and is now an economy on fire. The economy is below Max Employment as Wolf has repeatedly documented here. They screwed up Money & Credit Growth, and are now having to QT to fix the mess. Maximum Employment (NOTE: not “minimum unemployment” – there is a difference!!) So as to promote effectively the goals of… Maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production Note that this is actually a quadruple mandate: “The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” Doesn’t solve any real problems, will result in one of the 2 above very painful outcomes in less than 2 years.įederal Reserve Mandate (Section 2A of Federal Reserve Act, as amended 1977) Postpone painful outcomes as long as possible with tiny QT and negative real rates to protect asset bubbles and run high but hyperinflation. Will be very painful again and more so if revolutions start.ģ. Go back to QE and run with hyperinflation, misinformation and “divide & rule” hoping that peasant’s revolt can be beaten and rising powers don’t corner us.
Destroy asset bubbles and financialization of assets to make productive businesses like agriculture, manufacturing etc profitable. Now central banks no longer buying and real interest rate is deep negative (-4% to -6%).ġ. Bond Vigilantes: Investors who buy govt debt with the expectation that central banks with buy it from them at higher prices through QE and not with the expectation that government will use the debt for productive tasks that can generatereal interest.
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