“Above 8% inflation, reverting to 3% usually takes 6 to 20 years, with a median of over 10 years.” (Page 2) Fed operating loss is effectively an unintended “pivot” – the more the Fed hikes, the more money it injects into the banking system (Page 5) “Rate hikes…may be inflationary… [rate hikes are] effectively encouraging credit creation.” (Page 8) Y/y trailing 3-month US Federal spending spiked to the fastest growth since 2020-21 (Page 9) “Fed’s

In 2010, Bernanke argued that QE wasn’t dangerous because when the Fed paid out dollars to buy Treasuries, it was merely swapping one asset (dollars) for a close substitute (a Treasury bond is but an un-impeachable contract to deliver dollars in the future).  A Fed with an operating loss is completely different.  It will have to pay out newly printed dollars to banks without receiving any balancing asset even as it stops making interest payments

“The FTX saga…is yet another signal that the COVID bubble is collapsing and at an accelerating pace.” (Page 2) “Last week saw the biggest liquidity injection into financial markets since 2021” (Page 4) “This is the only time in history in a top 20 drawdown for stocks where USTs during that drawdown for stocks performed WORSE than equities.” (Page 6) “In recent months, liquidity in the UST market has deteriorated further.  This recent development is

Key quotes of the interview:   Mr. X: Let’s start with the things I can say I feel reasonably confident in, and then we can work backward from there.  First, above everything else, I think it is critical to remember that all else equal, a lower USD amounts to a liquidity injection as a lower USD eases financial conditions. Second, I would note that investor positioning has been and remains very overweight the USD and

“If not for voters under age 30, this week WOULD have been a Red Wave” … “the Biden Student Loan Jubilee paid political dividends” (Page 2) Thoughts on BTC sell-off in the aftermath of the FTX blowup (Page 4) US government deficit forecast doubling at this low of real rates is really bullish for gold (Page 6) Signal that has only triggered 2x in the past 55 years just triggered, portends recession & then severe

The world is on the road to “hyperinflation” and could be heading towards its worst financial crisis since the second world war, according to Elliott Management… An “extraordinary” set of financial extremes that come as the era of cheap money draws to a close “[has] made possible a set of outcomes that would be at or beyond the boundaries of the entire post-WWII period”, it wrote in the letter, which was seen by the Financial