Recently, I heard a Federal Reserve President use the phrase “Balance Sheet Unwind.” I was like, C’MON, Man!
Speak in plain English!
(These Ivy Leaguers never cease to amaze me with their confusing financial gibberish…And I’ve been in the business for over 36 years).
Let me try to explain this for you…In Plain English.
This “balance sheet unwind” is a reversal of policy that began in 2008 by the Federal Reserve. Back then it was called Quantitative Easing (QE1, QE2, Operations Twist, and QE3). It was a desperate attempt to bail-out the banks at our (taxpayers) expense.
In reality, it was a fancy name for printing money (out of thin air) to the tune of TRILLIONS of new dollars.
They loaned these Trillions to the banks at NEAR 0% interest.
Here’s the crazy part. It’s mathematically impossible to pay it off. And it’s accelerating the destruction of America’s monetary system.
So now our financial wizards in Washington believe they can reverse this debt monster by raising interest rates?
STOP! Think about this for a minute.
How can we raise rates (on our debt at near 0%) when we can’t even pay the interest on the debt we already have?
It’s insane thinking. Yet they’ll bamboozle the public with fancy talk like: “Tightening (raising rates) allows the Fed balance sheet to start the roll off (replace old debt with new) now and gradually (whentheydecide) remove accommodation.
This is only the beginning of something that won’t end well. And you need to follow these developments closely. They’ll have a major impact on your future net worth.
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