QE Creates Money, QT Destroys Money
July 7th, 2022 - Total assets on the Fed’s weekly balance sheet as of July 6, released this afternoon, fell by $22 billion from the prior week, and by $74 billion from the peak in April, to $8.89 trillion, the lowest since February 9, as the Fed’s quantitative tightening (QT) has kicked off. The zigzag pattern is due to the peculiar nature of Mortgage Backed Securities (MBS) that we’ll get to in a moment.
I have written often about the Federal Reserve, and the challenges it has created since its founding over 100 years ago. It should be clear to everyone that the way forward will provide great opportunity, but also pitfalls to be reckoned with.
Historical Quotes Which are Real Today
"Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States" — Sen. Barry Goldwater
"The financial system has been turned over to the Federal Reserve Board. That Board as ministers the finance system by authority of a purely profiteering group. The system is Private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money" -- Charles A. Lindbergh Sr., 1923
"We have, in this country, one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This evil institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the moneyed vultures who control it". — Congressman Louis T. McFadden in 1932 (Rep. Pa)
From General Law
"The regional Federal Reserve banks are not government agencies. ...but are independent, privately owned and locally controlled corporations." — Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982
These are some of the many challenges our country has been dealing with since the founding of the Federal Reserve. Through a huge void in leadership in our country, it should be obvious to anyone that markets are dramatically over-priced, and real estate has gone into valuations not seen, ever.
The Federal Reserve has put itself in position to be powerless to stop markets from finally adjusting to a much lower place, and reality is starting to be the word of the day.