(UPDATED) After watching a YouTube video, a subscriber is worried the Fed is trapped

Update 17:35 EST:
Subsequent to my original posting, the subscriber sent me a link to the referenced YouTube video below. Don’t chuckle, but it gets a lot of views and is monetized. I watched it and here were my comments to the subscriber below the video link (edited for grammar).

Hi Dave,

Okay, I sat through the video. Agh.

I don’t necessarily disagree with a lot of what this gentleman says (especially with respect to the pre-2008-09 timeframe). The problem is simple, he’s been wrong for 11 years worrying about a collapse, and the assets (collateral) that he calls garbage right now are not garbage like back then. It’s a whole different animal from last decade.

Moreover, he looks at the same charts we do and says that it’s QE that lowers the yields and that it can’t last. I counter, as I have all last decade, and claim that QE is not a problem; the markets have accepted it, there have been no collapses in asset prices, and the markets will all eventually be nationalized (managed) on a de facto basis.

The issue with this gentleman (and the others of his kind) is that he does not understand the hidden centralized management of the Conspiracy. I have repeatedly told the reader that to the untrained eye this system looks untenable and unstable. That is by design to freak people out. As long as people are freaked out, the powers-that-be can continue ramping up their system to further their grip on the control of the economy and over our lives. It is working very well. The more people that are like this gentleman, the more effective the globalists can be. It truly is an amazing conspiracy. And those who don’t understand are being bulldozed.

There is no repo endgame other than the fact that the overnight lending market will be nationalized by the Fed and Treasury. It already has. I feel so sorry for people who have listened to this stuff all decade. They have gotten wiped out. It’s a shame too.

I noticed he monetized his videos.


Original: 11:48 EST

Is the Fed trapped? Despite a ballooning Fed balance sheet, YoY CPI remains muted and the 10-Year UST yield has been fading.

I just watched a YouTube video which stated that the FED was trapped. The short reason is that when the FED expands its balance sheet it causes the Ten Year Treasury rate to increase.

The increase basically collapses the economy by depressing asset prices and tax revenues. I’d like to get your take as to if this is just a game of going back and forth forever or if there is a point of no return.


Stocks, bonds, and real estate rise after the Fed announces resumption of balance sheet expansion and Fed funds rate cut
I see the Fed has ammo to drop the Fed funds rate.
The U.S. Fed: 40 years of aggressive easing and still going strong

Dave did not provide me a link to the particular YouTube video in question, but I do not need to watch it. I think we can observe the behavior of the marketplace to conclude that whatever this YouTuber is worried about is misplaced concern. In fact, I think this analyst should be more worried about continuing to place his viewers on the wrong side of the market.

Perhaps this YouTube expert should stop reading the ZeroHedge Twitter feed, since ZeroHedge has resorted to mocking the Fed and the Western establishment. The owners of ZeroHedge figure that if it continues to be wrong, they can just add humor to the mix. That obviously has sufficed as their Twitter following has been rising.

Here is my warning to the reader. Based on recent developments, including the surfacing of this manufactured corona-virus crisis, I can easily see a scenario where the Fed could add trillions more in Treasury assets without serious market dislocations and higher inflation. Furthermore, when the next manufactured catastrophes appear, I guarantee that the Fed will ramp up into overdrive as needed.

Think about the overnight lending crisis. By the time this is all done, the Fed will have effectively taken over the repo market. Via the IOER mechanism, its conspiring network of money center banks (e.g. JPM, BAC, GS), and its recent additions to the balance sheet, the Fed already has usurped control. While ZeroHedge mocks the Fed and its followers sleep, the Fed has already effectively “nationalized” overnight lending.

Wrap your mind around that thought next time you predict collapse.