The election is only a few months away, and it is generally accepted that many people vote with their wallets. To help buoy perception of the US economy amongst wallet-voters from now until November, Yellen and the US Treasury could choose to create looser monetary conditions directly — funnelling a large part of the remaining $500 billion in the TGA into the economy and, by extension, pumping stonks.

Are the NY Fed and the Treasury actively using the RRP and TGA levers to work against the Fed’s current stated policy of fighting inflation by reducing the quantity of money? And if so, do they intend to continue doing so?

Bitcoin is digital money and represents a different system and ideology regarding how society can best organise its monetary affairs. The USD is the global reserve currency, and it comes installed with the American-led western financial system. If the USD system generates excesses, Bitcoin is there to absorb them. Bitcoin is a real-time smoke alarm tied to the profligacy of the USD-based financial system.

Let’s approach the situation as a politician who cares more about accounting and public perception rather than economic reality. I need the Fed to appear to be fighting the inflation scourge that is rendering my constituents paupers — but I also need the stock market to pump, so my rich donors are happy. What to do?

As I’ve said before, I think the merge will drive positive price movement for ETH regardless of USD liquidity conditions.

Pre-pandemic, the reserve ratio requirement hovered between 3% to 10% – resulting in a 33x to 10x money multiplier for US commercial banks – but the Fed has since slashed it to 0%, meaning that commercial banks can lend out 100% of the deposits they receive with no obligations to hold any of those deposits as a safety net

So the RRP balance has recently decreased, as has the TGA – begging the question: are the NY Fed and the Treasury actively using the RRP and TGA levers to work against the Fed’s current stated policy of fighting inflation by reducing the quantity of money?

I don’t have an answer to these questions, but there is always a strong political will among the ruling party to generate favourable short-term economic conditions before an election so that party members can keep their jobs. They are human, after all.

Each date corresponds to a local top or local bottom – and the timing is uncanny.

Risk assets like Bitcoin and stonks have responded positively to rising USD liquidity, even though the price of money has increased. So currently, it would appear that the performance of financial assets is more contingent on the quantity of money than the price.