Relax, Unwind

In the world of finance, these words describe the Fed’s next moves.

These are soothing words, but as the Fed “normalizes” its balance sheet, soothing turns into smoothing, and that’s not all good.

The Fed will be doing some serious, quantitative smoothing. Extreme data points that dominate financials — really high equity values with really high bond prices — will be stretched, to occupy more space over time, effectively smoothing out the chart of assets and liabilities occupying space on the Fed’s balance sheet.

The Fed has a big peak of accumulated, risk-assets to be sold back to its member banks. These assets have been laundered, ridding them of toxic properties, but only because the property is being engineered to occupy more space over time.

It appears, then, that this private property has been turned from bad to good. If these assets were allowed to run their natural course, back in 08-09, capitalism would be considered irreparably bad, from which no good can be derived.

Instead, now, at current value, we are going to unwind the risk in the form of quantitative tightening (QT). We now have increasing consumer and business confidence, since credit is again extended to pre-crisis levels, on the QT.

If events in 08-09 were allowed to take a natural course, what would the “alternative” be. Would it be the “alt” left or the “alt” right, on demand.

Using quantitative, monetary tools, the physical science of the effective cause is conservation of the consolidated risk. The risk-value is conserved — being unwound, relaxed.

What is the actual good being derived from the bad, here, yielding to the subordination?

If consumer and business confidence is subordinated to the debt, then purchasing power is the efficient cause.

Since the on-demand attribution causes efficiency, is it not better (only natural) to ensure it in priority, rather than always turn it into a liability (transformed into toxic assets), by default!


About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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