Last Year at This Time…

Last year at this time, Fed Reserve Governor Lael Brainard sounded hawkish on promising to “Ramp Up” the inflation fight.

But the actions of these FEDS make you question their reasoning skills.

Example:  Brainard said the Fed would raise rates methodically and shrink its balance sheet at a “Considerably” more rapid pace than it did in the previous cycle.

But…and this is a Very Big Butt…

They can’t rapidly reduce their balance sheet.

Why?

If they do, the whole financial system collapses.

Huh?

Brainard also acted tough (Hawkish) by throwing down the gauntlet and quoting former Fed chair Paul Volker.

But people forget how Volker pushed interest rates to 20% in the early 80s to rein in inflation.

And now with rates moving up – from the lowest in 5,000 years – can you imagine what would happen if rates were to follow the Volker strategy?

Hawks Last Year?

The Fed can talk about balance sheet reduction all it wants. But talking and doing are two different things…

Bottom line, shrinking the balance sheet ain’t gonna happen.

Why?

Because the FED Banksters created these massive bubbles.

And they – like most politicians – will NEVER admit guilt.

And speaking of politicians, both parties demanded the Fed fund their insane spending sprees for decades.

Why?

To keep the illusion of prosperity going.

As a result, they became the great enablers.

And NOW payback for TRILLIONS $ in debt is now coming due.

As a result, inflation is here to stay.

Begging For Bond Buyers

In order to shrink their balance sheet, the FED needs to dump Trillions of bonds.

But that creates a big problem.

Supply and demand dictate that as the Fed dumps bonds onto the market, supply will rise and the price will fall.

As a result, yields will rise.

But this creates another big problem for the US government.

Rising interest rates mean Uncle Sam’s borrowing costs rise.

(Hashtag #DUUUHHHH!)

Think of it being like your bank raising the interest rate on your mortgage, causing you to pay more every month.

So, the US government will have to pay more to finance its debt.

That means it will have to borrow more.

And that means even more bonds on the market.

It’s a vicious circle.

But it’s proof that the chickens have come home to roost.

One thing for sure is the markets are responding accordingly.

So, how are you prepared to deal with it?

Find out in our March edition of “…In Plain English” (HERE).

Share this with your friends…especially if they own government bonds.

They’ll thank YOU later.

Remember: We’re Not Just About Finance

But we use finance to give you hope.

********************************