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(Schiff)—In the fight against inflation, is it the Fed or the Treasury that calls the shots? The answer is, it’s both. The Fed raises interest rates to make loans less attractive and bring inflation down, but The Treasury has its own set of magic tricks to artificially “stimulate” or “tighten” the economy as well. One of them is a Treasury buyback program, something that was just reincarnated for the first time in about two decades. This is where the Treasury repurchases its own outstanding securities from the open market to increase liquidity, stoke, demand, and bring down yields.
If Treasury markets can’t be reigned in, the Fed expands its balance sheet by buying those Treasury securities to add liquidity and stability. These “open market operations” are usually the “money printing” that people are talking about happening at the Fed. “QE” refers more specifically to operations where the Fed is buying other assets beyond just Treasury securities, as occurred in the 2008 crisis and during COVID. But the Treasury buying back its own issued debt is, in essence, QE by another name.
When interpreting Treasury yield data, remember that this market is being heavily manipulated by Yellen – she's conducting the Treasury versions of both Operation Twist and QE, w/ overreliance on short-term issuance and now buybacks; term premium is now virtually nonsensical: pic.twitter.com/RH8UixQOMK
— E.J. Antoni, Ph.D. (@RealEJAntoni) May 1, 2024
While this occurs outside the halls of the Federal Reserve itself, Treasury buybacks are merely a different way to print money from nothing. The US is running a deep, sustained fiscal deficit with no true debt ceiling — so the Treasury buys back its own securities by issuing new debt, which it creates out of thin air. With spending far exceeding revenue, higher interest rates plus more debt means that fiscal deficits accelerate. The short-term stimulative effect of this somewhat offsets the Fed’s tightened monetary policy but digs a deeper hole in the longer term.
One method the Treasury uses is to shorten the average duration of securities so that debts mature sooner. That means more short-term debt (like Treasury bills) versus long-term debt (like Treasury bonds). This encourages more capital flows into the banking sector and helps stave off instability. If it fails, the big banks still win: when smaller banks fail, they’re usually just absorbed by bigger ones where the profits are private but the losses are socialized. The “Too Big to Fail” club becomes even bigger and more powerful.
When the Treasury issues more short-term debt, it’s waging war on the Fed’s higher interest rate policy. Both the Treasury and Fed need to keep Treasury yields down, but tightened monetary policy encourages higher yields. If yields get too high, the bond market — and challenged industries like commercial real estate that rely on debt — are screwed. So while the Fed tightens, the Treasury must loosen. Yields have since gone down, but if inflationary pressures and other factors push them back past 5%, both the Fed and Treasury are trapped.
“Higher for longer” policy at the Fed is even more essential for holding back inflation as the Treasury injects liquidity into markets. If the Fed lowers rates now, the results of simultaneously expansionary monetary and fiscal policy will send consumer prices soaring.
So are the Fed and Treasury in opposition, or are they working together, one changing its policy to prevent a disaster caused by the policies of the other? The answer is complex, but the oversimplified version is that the two have locked the economy into a game of musical chairs where, eventually, the music is bound to stop.
The end result of the Treasury’s showdown with the Fed will still be out-of-control inflation. Both artificially contract and expand the money supply, and their policies have both created an inescapable trap. COVID QE is one big unexploded bomb that is sitting in the center of that trap. And even with the Fed holding off on interest rate cuts in the short term, the Treasury’s buybacks are QE by a different name. With too much inflationary pressure and not enough tools to stop it, the end result of all this fiscal and monetary tinkering will be a disaster for the dollar.
‘Merely Coincidental’: Secular Scientist Work Overtime to Explain Away the Miracles of Christ
by Harbingers Daily
Was the miracle of Jesus feeding the 5,000 with just five loaves and two fish a little less than miraculous? Well, that’s what a group of scientists are claiming in a recent paper published in a scientific journal. Instead of a supernatural provision by the Lord, they claim the feeding…
Google Hosts Party for Democratic Operatives Plotting To ‘Resist the Republican Agenda’
by Free Beacon
The resistance’s bar tab is on Google. Priorities USA, a top Democratic super PAC with an affiliated dark money group, is convening a summit of left-wing digital activists on Wednesday afternoon to deliver a post-mortem on Vice President Kamala Harris’s election loss and strategize how to “resist the Republican agenda,”…
“The Correction Before the Surge”: Why Gold and Silver’s Future Is Brighter Than Ever
by Sponsored Post
It was long overdue by most estimates. Precious metals prices have been steadily rising for far longer than even the …
Ukraine Denies Reports From Think Tank That It Is Months Away From Developing a Nuclear Weapon
by Natural News
Ukraine has denied reports suggesting it could develop a nuclear weapon soon, following claims by a Ukrainian military think tank. The report, published by the Ukrainian think tank and nongovernmental organization the Center for Army, Conversion and Disarmament Studies, claimed that Kyiv could use spent nuclear fuel from its remaining…
Alex Jones Reveals Elon Musk Saved Infowars From Being Sold to The Onion
by End Times Headlines
Alex Jones has declared ‘the cavalry is here’ as attorneys for Elon Musk’s X jumped in to help put a temporary pause on the sale of his controversial Infowars to The Onion. The satirical news publication said the bid was sanctioned by the families of Sandy Hook Elementary victims who…
FBI Whistleblower Says FBI Intentionally Blocking Security Clearances for Trump Officials
by The Conservative Treehouse
It should not come as a surprise to see the same methods deployed against President Trump in 2024 that were used by the FBI in 2016. The difference is now that President Trump understands the full power of his office in the security clearance process and that he doesn’t need…
Pastor Greg Locke Burns Voodoo Doll He Claims Was Found on His Property
by End Times Headlines
Even amid ongoing warfare, we are called to stand firm on the Word of God. Pastor Greg Locke knows well the spiritual and physical attacks directed at him; he was recently targeted by a gunman. Now, he faces another spiritual assault, this time from someone attempting to place a curse…
Trump’s Incoming FCC Chief Already Putting Target on Big Tech ‘Censorship Cartel’
by WND
Social media companies have become a “cartel” for suppressing information with which they disagree, and that agenda now is going to be getting the attention of Brendan Carr, President-elect Donald Trump’s pick to be the chairman of the Federal Communications Commission. It was social media companies who played a role…
Sabotage: Two Undersea Internet Cables Connecting Four NATO Nations Were Severed
by Publius
Many in the international community are claiming sabotage as the only viable explanation for two fiber optic internet cables in the Baltic Sea being severed less than 24-hours apart. Fingers are being pointed at Russia as one of the the cables connected NATO nations Germany and Finland. The latter was…
Pennsylvania Supreme Court Orders Democrats to Immediately End Counting of Illegal Ballots
by Infowars
The Pennsylvania Supreme Court on Monday ordered Democrats in several counties to immediately halt their unlawful counting of illegal ballots in the Senate race recount. The Pennsylvania Supreme Court had ruled before the election that mail-in ballots lacking formally required signatures or dates should not be included in official results….
22-Year-Old Woman With Depression Was Almost Euthanized, She Changed Her Mind Right Before She Was Killed
by Life News
Why do you oppose euthanasia, Wesley? If people want to die, we should help them die. No. And here’s an individual example explaining just one reason why. A deeply depressed woman was about to be lethally injected in the Netherlands — but changed her mind just in the nick of…
“Massive Breach”: T-Mobile Network Hacked by Chinese State Sponsored Intelligence
by Tyler Durden, Zero Hedge
(Zero Hedge)—Where’s John Legere in a pink t-shirt when you need him? Among the multiple stories over the last few weeks about Chinese intelligence and hackers either attempting to, or outright gaining access, to U.S. cell phone networks (with reports stating President Trump and his team were targeted), comes news…
Trump’s Idea to Shut Down Department of Education Gets High Five From Top Christian Evangelist
by WND
A priority for the incoming administration of President-elect Donald Trump is to tackle the Deep State, the bureaucracy in Washington that is a self-perpetuating industry, to find what American taxpayers don’t need or want. And get rid of it. One of the targets he’s already identified is the Department of…
Experts Sound Alarm Over ‘Shocking’ Spike in Strokes Among ‘Healthy’ Young People
by Slay News
Health experts have issued a chilling warning to the public over a “shocking” spike in strokes among “healthy” young people. The “alarming” surge was identified in official UK government data. The data shows that recorded cases of deadly strokes skyrocketed in 2023 and continued soaring this year. In 2023/24, the…
