So I was talking to @ddustin about some econ thing I didn’t understand and he told me about how the Fed’s assets/balance sheet is full of mortgages and corporate bonds and equities/stocks??? That they buy on the open market and then, a lot of times, just hold them until the thing… expires (in the case of a mortgage/bond)
He claimed that since these things weren’t really for sale, the USG was essentially just printing money and handing it out to anyone who could get approval to issue a bond/take out a mortgage.
It finally hit me that that’s what “QE” actually means. The government being a buyer for debt/assets. It inflates the market, or is basically a wealth transfer from the USG to whoever is holding that bond. It’s pretty clever!
It reminds me of this absolutely amazing show I saw on a plane last year, Scam 1992.
Its about an Indian stock broker that rises from nothing to be one of the most powerful and wealthy men of India. And the journalist who works tirelessly to bring him down 🖤.
The thing he gets caught for is that he’s taking huge amounts of cash that were destined to buy government bonds and “floats it” in the stock market (buys a lot of equities). This has the effect of lifting the entire market, and making everyone really rich on paper.
The market comes crashing down on some bad news, and then the journalist does a story on the bonds that are “floating” (they’re basically missing) and the cash for the bonds has to be pulled from … somewhere to cover all the liars butts.
So the protagonist ends up in jail (he then dies in jail). Anyway, I’ve been thinking a lot about this, and I’m so shocked at how much QE is exactly this same behavior. Except that the money never has to be repaid back, the asset prices can just stay inflated until….?
Man what a crazy thing we do with money. Its insane how important it is to the quality of life of the people in a country and what power our economists have over that.
Also pretty insane to me who benefits from these cash hand outs. Big corporations are basically subsidized by the state thru bond sales. O.o
PS: I found it really hard to find Scam 1992 online with English subtitles. If anyone has a 🧲 link for it, please drop it!
Yes, we are in a debt-based economy. It's sad that the message basically is: take on debt, it'll cost you less in the future. If you are unable to get yourself into debt to buy things that appreciate in value, you are basically screwed compared to the ones that can.
Soft/covert QE! They’re doing something similar with the BTFP program, except this time, buying underwater assets at par value only 🤪🤘🙄
Things like BTFP and the PPP "loans"..... these things are what push me from being negative toward our system to being angry/militant/ready-to-revolt.
Why is that very few seem to be outraged about these things?
I think it's likely because of all the jargon in combination with a decades-long propaganda campaign that finance/money is really difficult to understand.
also most people don't wanna do the legwork that you have done, analogies that normies can understand might work, but it could also just be a "slow boil the frogs" kinda deal
This one should technically pair well with the subtitles available here.
Disclaimer, i haven't actually done the download, so do it at your own discretion.
Seems like I didn't properly link the magnet. Or that it was removed. That would be reasonable, I would imagine SN does not want to get involved in sharing content illegally.
Torrents are not illegal.
110 sats \ 2 replies \ @xz 25 Jan
Thanks for sharing this. I suppose it was early internet days, so not many outside of India heard about it. Was Harshad Mehta the mastermind or fall guy?
Was Harshad Mehta the mastermind or fall guy?
Both?? lol. He started doing what "everyone else was doing" and then got in a rough spot and his competitors took the opportunity to destroy him.
110 sats \ 0 replies \ @xz 25 Jan
feuding investors.. greed.. power.. Sounds like some seriously underhand, back-stabbing and betrayal. I may have to give this a watch if I find English subs= : ]
110 sats \ 0 replies \ @2d 25 Jan
The Fed is quite the rabbit hole to dig into
It’s technically not a government agency - supposed to operate independently and be non partisan though you can definitely argue that line is pretty blurry.
The board of governors are appointed / confirmed by the pres/usg and that body reports to Congress, but the regional arms are basically private and have their own boards appointed by the governors and member commercial banks.
The FOMC handles the monetary policy and it’s made up of the governors and some of the regional presidents.
So the usg/treasury isn’t actually the one buying debt - they’re selling to select banks and the fed makes their purchases in secondary markets from those banks!
I think it’s a bit more convoluted than this. It is something I haven’t completely flushed out myself but floating bonds and what the fed is doing with QE are vastly different. Instead of creating and destroying I think the fed is just picking winners and losers and trying it’s best to manage liquidity.
100 sats \ 1 reply \ @Cowboy 27 Jan
the intro sequence slaps imo