The Debt Ceiling Crisis: What is it & Why it Matters | QPOL Issue #49
How Yellen’s Treasury is caught in Powell’s Fed web.
Since Jerome Powell’s chairmanship to the Federal Reserve, The Fed has been fighting to preserve its credibility and gain back control over its monetary policy in multiple ways. Most notably, they’ve been able to increase the Fed Funds Rate above 5% in the last year and Powell will likely raise the FFR another 25 basis points in June. Regardless where rates are however, it’s critical for the Fed to continue its quantitative tightening in the background and decrease its balance sheet. The Fed has been achieving this QT goal by removing around $95b off its balance sheet per month by letting treasuries mature/roll off.
As hawkish monetary policy rages on, it’s been quite the chink in the armor of Yellen’s globalist-run Treasury department. Yellen has been crying wolf that the government won’t be able to fund itself unless the debt ceiling is raised. The debt ceiling debate is the same old song and dance Americans have grown jaded of over the years, but this time is truly different when it comes to the gridlock between Davos-backed Democrats and the sovereignty/nationalist-based plutocratic Republicans. The debt ceiling will rise. That’s a no-brainer. The real question however is what spending cuts will actually take place? What exactly is Yellen so hell-bent about spending on? That’s where the main gridlock is: Powell’s hawkishness vs Yellen’s incessant spending. Let’s break down how the Treasury is stuck in the Fed’s web.
Yellen the Whale 🐳
As the Fed continues QT via rolling $95b off its balance sheet monthly, that gives the Treasury department $95b of room to issue new treasuries to the market. However, Yellen doesn’t want to issue new treasuries because that means she needs to pay 5.25% in coupons on these newly issued bonds. If she did, she would have to cut spending in order to afford those coupon payments to investors.
If you look at the spread between short duration treasuries and the 10 year, Yellen’s fiscal interests are more interested in selling out the US economy for the sake of preserving the European economy, (specifically helping out her commie wing man, Christine Lagarde, control the US-German spread on the 10-year note).
What Yellen is effectively doing is Yield Curve Control (YCC). Through selling short duration debt like the 2 year note and buying the 10 year note, she’s making inflation and the US economy look more unstable than it truly is. It’s spooking the markets by inverting the yield curve like a market-making whale against a bunch of fin-twit trader degens.
It’s bond basics:
when bond prices are up (people are buying them) the yield/coupon is low, meaning those bonds are a safe place to park your money.
when bonds get sold, their prices fall and their premiums/coupons increase which represent signals their risky investments to the market
By raising rates, the Fed is forcing Yellen to stop YCC. It’s forcing her to stop and think about what to spend her slush fund on (the Treasury General Account, A.K.A. TGA) and effectively forces fiscal responsibility on Congress. She clearly doesn’t wanna do that and would rather spend that money on tranny bathrooms, sell 2’s to buy up 10’s, send more money over to Ukraine, or whatever she’s spending it on to ruin the credibility of the United States.
Yellen is full of it when she’s says there’s not enough room/money to fund the government. The treasury is only broke because she (as a front for Davos) is spending out of the TGA like when a college kid gets their first credit card.
If Davos gets their way, there won’t be a fiscal tightening of the leash on Congress because the goal of these globalist oligarchs is to consolidate the power of the Fed and Treasury. In order to accomplish that, Yellen et.al needs to force a crisis in the United States through reckless spending and ruin the credibility in US markets and the Fed. The nuclear option would be a false-flag or similar event that would drag the US into all out war against Russia and China. The actions of these people truly are that sinister. We are dealing with global-communist vandals.
War As The Last Resort
Powell and his plutocrat/sovereigntist-minded banking squad aren’t are clearly acting as a force against the Davos-backed Treasury. He has his minions of board governors like Waller and Jamie Dimon out in the press saying not to discount more rate hikes in the future, and that they’re completely against the Davos climate agenda. Essentially, the Fed raising rates is in a roundabout way bankrupting Davos via the TGA and forcing Yellen’s piggy bank to run dry to force Congress to negotiate on reasonable budget cuts. Powell knows war is a possibility and is preventing it by keeping rates high/making it too expensive to fund & causing financial institutions to make deals with each other they couldn’t otherwise under ZIRP, preventing the Fed having to bail out the regional banks.
The latter is basically Powell handing power back to market participants to buy distressed assets from each other to get yield, duration, and cover any unfounded liabilities.No Fed bailout necessary, meaning the media is also full of it saying there’s a banking crisis. Powell has let the markets do the Fed’s job for them. All this is possible bc we’re officially off the Bernanke Doctrine of zero bound interest rates.
However, domestic financial plumbing being protected at home is peanuts compared to what Davos is willing to do. Biden has basically declared war on republicans blaming them for the default. To avoid the default, they’ll drag the US into war (as I’ve said countless times). Russia has essentially won the war against Ukraine, and Davos won’t put up with it. European Commission President Ursual von der Leyen basically announced war against Russia at the G7 meeting in Japan over the weekend by basically saying Europe and Asia are united on the same goals. This was their strategy all along, folks. As Luongo and others have been saying for some time now, Biden was elected to be the wartime President just as FDR was.
So how does this all go down? Can Powell do an emergency rate hike without destroying the Fed? Nobody else in the world can raise that aggressively, so the other central banks would be destroyed and capital would flow into the US instead because they’re the ones most credible, right?
Or does NATO go for the false flag hail Merry and have a Ukrainian dress up like a Russian and kill a US soldier? How this war is really fought out is anyone’s guess. Although there may be steps to negotiate a default, it seems the philosopher kings aren’t going to budge. Hold onto your butts, ladies and gentlemen.
~ Phil Gibson
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