You can literally hear the slurping sound of liquidity being drained from the financial system.
This ends when US government moves some a 7% deficit to a balanced budget/austerity. Similar to what happened in Britain last year.
An interim step, applied in the 70s, and in Britan recently, and similar to the BTFP program is to "temporarily" buy bonds to try and dampen volatility. The fed intervenes when things get to volatile, they know that they can't put a ceiling on yields or it creates an inflation spiral which ends in loss of reserve currency status.
There would be a cap on amount of purchases and they would then get resold over time as part of the QT program. This keeps inflation higher for longer without austerity and likely creates panic selling hence why austerity is needed.
This is a really bad situation. It definitely means hard landing.
If you can't find the full version of the summary below feel free to email and I'll share it. Have a look at ccc liqudity and worsening debt serviceability. Higher for longer is going to result in many bankruptcies (layoffs).
You can literally hear the slurping sound of liquidity being drained from the financial system.
This ends when US government moves some a 7% deficit to a balanced budget/austerity. Similar to what happened in Britain last year.
An interim step, applied in the 70s, and in Britan recently, and similar to the BTFP program is to "temporarily" buy bonds to try and dampen volatility. The fed intervenes when things get to volatile, they know that they can't put a ceiling on yields or it creates an inflation spiral which ends in loss of reserve currency status.
There would be a cap on amount of purchases and they would then get resold over time as part of the QT program. This keeps inflation higher for longer without austerity and likely creates panic selling hence why austerity is needed.
This is a really bad situation. It definitely means hard landing.
If you can't find the full version of the summary below feel free to email and I'll share it. Have a look at ccc liqudity and worsening debt serviceability. Higher for longer is going to result in many bankruptcies (layoffs).
https://apolloacademy.com/credit-market-outlook-5/