Jesse: the Fed's Next Rabbit Trick

[unlucky]

Re: Jesse: the Fed's Next Rabbit Trick

The Federal Reserve Banks charters can be dissolved by an act of Congress, or be subject to forfeiture for a violation of law. Since the Fed has failed its every mandate, I hope that it will be done away with soon.

Change is surely coming. We can only hope that it is for the best.

[Bundi]

Re: Jesse: the Fed's Next Rabbit Trick

The positive aspect to giving authority over the money supply to Congress is that the buck (literally) stops there. If they are fiscally irresponsible then they can be voted out of office. The members of the Fed are not beholden or accountable to the People.

The Federal Reserve Banks charters can be dissolved by an act of Congress, or be subject to forfeiture for a violation of law. Since the Fed has failed its every mandate, I hope that it will be done away with soon.

I wonder who/what the Fed is accountable to? Is Bernanke, with all that power, really allowed to do as he pleases or as the banks please. Twist hardly seems to me to be good for banks which I suspect want yield delta out the curve given they borrow cheaply on the short end. Although those banks recently helping the cause with longer dated purchases, now get a reward capital appreciation.

Speaking of influencing the monetary regime change process...what is the U.S. strategy these days? Is it to break the yuan peg? The yuan began to appreciate a little more rapidly after the end of QE2. Was this progress? Perhaps the Fed realizes that another round of QE now runs the risk of destabilizing the dollar too quickly so is trying another tact. Sell gold (or sell short end treasuries to make short rates less negative although not positive), buy dollars, and bring the yuan up in relation at a time when the Euro is suffering. In doing so, China loses leverage into another key export market into Europe while the US can buy more oil. Does this force the Chinese to devalue relative to the dollar and increase inflation through relatively higher input costs there. Basically the Chinese would need to choose between purchasing power for the resource economy and export competitiveness. A form of agitation.

Then initiate another round of QE once U.S. inflation tapers and send hot money flowing again.

Some have speculated we are in a game theory mode. Simply get the other guy to crash first in order to have more ability to navigate geopolitically with leverage.

This is total speculation on my part but am just trying to think about things in a different manner.