The Feds Plan To Use The Banks

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Summary

➡ The Federal Reserve (Fed) is secretly boosting the market while publicly trying to control inflation, which has surprised many investors. They’re considering a change to the bank’s leverage ratio, which could have big effects. This change could mean that banks won’t have to count U.S. government bonds when figuring out how much money they need to keep on hand. This could make the banks look stronger than they really are, which could be risky.

Transcript

What if the Fed doesn’t actually pivot and cut rates as investors are betting on, and instead secretly stimulate the markets, hoping most people won’t notice? Well, that’s exactly what’s been going on with the recently proposed Fed banking ISDA change to the bank’s slrs. Or in other words, it’s about to get turned up big time. Now, the Fed’s stuck. They’re trying to publicly fight inflation, but at the same time secretly prop up the systems, and it’s caught most investors off guard.

And wait until you see this new trick they have up their sleeves that’s about to be rolled out. So in this video, we’re going to break down how they’re secretly stimulating the market so you’re not caught off guard. We’re going to look at what this means for the economy and our investments. We’re going to look at what we can do to protect our wealth and use this to multiply it even faster.

So let’s go. All right. Welcome to the channel if you’re new. My name is Mark Moss. I make these videos to change the way you think about money because almost everything we’ve learned is wrong. And unfortunately, almost everything that we see in mainstream media and even what the Fed is telling us, this is wrong as well. So we’re going to break this down so you’re not caught off guard.

And while, like I said, investors are all waiting for the Fed to start cutting rates in 2024, right now, at this point it’s generally accepted consensus that this is going to happen. It’s just a matter of how many rate cuts. However, we keep seeing news. We see mentions in the news. We see headlines that it might not happen, and even some headlines that the Fed might actually raise rates instead.

Dallas Federal Reserve President Lori Logan said something that many people don’t want to hear. She said, quote, if we don’t maintain sufficiently tight financial conditions, there is a risk that inflation will pick back up and reverse the progress we’ve made. She went on to say, quote, in light of the easing in financial conditions in recent months, we shouldn’t take the possibility of another rate increase off the table just yet.

End quote. There you have it. That’s what’s going on. The Fed’s hinting that maybe we could see that they don’t want the market to reverse the gain. So what’s really going on here? Now, I want to make this simple. Okay, look, the Fed is juggling between an easy or a tight monetary policy. Since 2008, they’ve been mostly been in easing, or what we call quantitative easing. And then in November of 2021, they switched to quantitative tightening.

Let’s just break down exactly what this means real quick. So quantitative easing, QE is a monetary policy tool employed by central banks like the Federal Reserve. And they use it to stimulate economic activity by increasing the money supply and influencing the price of money or interest rates. Now, technically, though, technically, QE increases the money supply directly by purchasing financial assets like treasuries, government bonds from the banks and other institutions, which injects new money into the financial system.

All right, you got that? It’s important to understand that as we move forward now, it’s also influencing interest rates. By buying a significant amount of government bonds, they artificially increase the demand for those bonds, supply and demand. So when they increase the demand, then it drives the prices up or it drives the yields down, the interest rates down, and these lower interest rates then incentivize borrowing. More people buy things, more people invest.

And that is the goal is to boost economic activity. Now, since January 2022, we’ve been in the opposite, right? We’ve been in a tightening. The Fed’s been tightening, so they’ve been raising rates and they’ve been letting bonds roll off their books. Now, that brings us right back to now. All right, so the question is, will they pivot? When will they pivot? And like I said, all the investors are waiting for them to go from a tightening stance and back to an easing stance.

Or are they already up to something more sly, more sneaky? And if so, what should we be watching and what should we be doing about it? And what are the two types of assets that we should be buying, and the one type of asset that we should avoid in this type of market environment. Now, if you’re not sure I’m going to be going through this all live to help you guys out, showing you exactly what I’m doing to prepare my assets for this shift, I’m going to break down probably 20 or 30 charts to show you how to build a detailed plan of exactly what to buy and how to position to ride this inflation wave.

It’s a completely free event. I’m going to stay on. I’ll answer all your questions live to make sure you know exactly how to implement these wealth strategies. You can check out the link in the description below. Okay, so here’s what’s really going on with the Fed right now. While the official line is that QE is over, the real story that you’re being distracted from is that the International Swaps and Derivatives association.

That’s the ISDA. They recently proposed a change to the bank leverage ratio, the SLR formula. Now, this proposal sends some, I don’t know, pretty alarming messages about the stability of the banking system and the confidence in the US government directly. Now, this might sound like financial jargon to you, but stay with me, okay? Cause this is a crucial piece. The SLR basically tells banks how much capital they need to hold for every dollar of assets on their books.

So the SLR is calculated by dividing the banks tier one capital. Tier one capital is capital held in a bank’s reserves and used to fund business activities for the bank’s clients. So you divide the bank’s tier one capital by all assets on the bank’s balance sheet, including us treasuries and deposits at the Federal Reserve banks. So what this means is the banks use the SLR to calculate the amount of equity capital that they have to hold the reserves, what they have to hold relative to the total leverage exposure that they have.

And here’s the kicker. The ISDA wants to change the formula, of course, right? They want to change the formula to exclude us treasuries from this calculation. Now, you know how the government operates, right? If a formula spits out a number they don’t like, then they just change the formula to get a better number. Right, which is what this proposal signals. And it sends alarming messages about the stability of the banking system and the confidence in the US government debt.

And this isn’t just some small, innocent change. This is a huge and yet almost hidden impact. By excluding Treasuries, this change would incentivize banks. Banks to buy more of them. Why? Why would it do that? By buying a ton of treasuries, the Fed artificially increased demand, driving their prices up and lowering the interest rates. This, in turn, pumped money into the economy, and it boosted asset prices up.

Now, in effect, the proposed change in the SLR would achieve basically the same effect by boosting demand for treasuries, driving prices higher and interest rates lower than the other ways would be. Now, given the impact of treasury yields on the broader bond market, it would also likely push other borrowing costs lower as well. It would also enable banks to lend more money than they otherwise could under the current SLR scheme.

The current ratios they have, this is all a form of money creation, because money is created through debt. So when all of these borrowing costs go lower and the banks are lending more, then the money supply is increasing through the debt issuance. And this is going to have a massive inflationary effect, it’s the same thing. Right, but it’s just not called QE. So, technically, it’s not a pivot.

Officially. Technically, it’s not called QE. Technically, it’s not a pivot. It’s what I call factually correct, but intellectually dishonest, because factually, it’s not QE because it’s basically the same thing and achieves the same thing, but it’s done secretly. So the Fed looks like they’re doing all they can to fight inflation, but the truth is, it’s essentially secret QE. It’s disguised in these regulatory tweaks. Okay, so now you’re asking yourself, why would the Fed be pulling this off the books move? Why would they be doing this secretly? Well, there’s a couple possibilities.

One, maybe they want to maintain market confidence by avoiding the dreaded QE label that everybody has been waiting for. So they want to try to control the narrative. They want to avoid the criticism for continued stimulus and pivoting too soon. Or number two, maybe there’s trouble in the banking system. Now, this proposal also casts doubt on the notion that the banking system is sound and resilient. You remember back in March of 2023 when raising interest rates at the fastest pace in history, it kicked off a whole banking crisis.

We saw three banks collapse, kicked off by the collapse of Silicon Valley bank. And then the Fed intervened to hold off this banking crisis. They managed to paper over the problem with a bailout program called the BTC TFP bank term funding program. Now, look, some might argue that the Fed’s just using different tools to achieve similar goals. But here’s the problem with this cloak and dagger approach. Transparency matters.

Trust is rapidly dissolving today. And we need honesty, we need clear communication so that we, you and I, us, we can plan our financial lives accordingly. But when the Fed hides its true intentions, it erodes trust. It erodes trust on the entire financial system, and it gives us the wrong signals, and that leads to us making the wrong financial moves, which ends in disaster. So what does this mean for the economy? What does this mean for our investments? Remember the saying, theres no such thing as a free lunch? Well, secret QE will have the same consequences as regular QE.

Its different. They call it something different, but the outcome is the same, such as fueling inflation or creating instability in the financial markets. Which is why you see asset prices continuing to make new all time highs right now, even though the Fed’s not pivoting. We’ve seen gold, we’ve seen bitcoin making new all time highs. In fact, seeing the dollar and gold rise together is all we need to know.

So it means inflation. It means increases in the money supply, which then leads to increases of prices, goods and services and assets go higher. Now, this is going to hurt the economy, but at the same time, it pushes asset prices higher. So here’s the bottom line. Don’t be fooled by the Fed’s statements and the mainstream media headlines. Money printing and inflation is coming, and it’s coming in hot.

Now, there’s always two guarantees in life. I say there’s three guarantees in life now. There was always death in taxes. And now the third guarantee, money printing. So what do we need to do? We need to buy scarce assets. We need to buy energy intensive assets. We need to do that to protect ourselves from this inflation. And even better yet, use it to our advantage to get ahead.

Now I’m going to link to some additional resources in the description so you can see what the Fed is doing. I’ll show you where to get the charts to watch that. I’m going to give you some links. You can learn more about macroeconomics. You can understand this a little bit better. And if you want to know the two types of assets to buy and the one to stay away from in this market environment that we’re having, I’m going to go through all this live to help you out, show you exactly what I’m doing to prepare my assets for this shift.

I’ll break down, like I said, about 20 or 30 charts to show you how to build a detailed plan of exactly what to buy and how to position this ride for inflation. Like I said, it’s a free event. I’ll stay on, answer all your questions to make sure you know exactly how to implement these well strategies. There’s a link in the description below. And remember, you have to take control of your future, right? You don’t have to be a victim of the system.

Yes, inflation is here. Yes, the debt spiral is real, but you don’t have to be a victim to that. By understanding the hidden games that are being played, you can make informed decisions to build your own path to financial freedom. And if you want to learn more about how Janet Yellen and the US treasury is maneuvering around the Federal Reserve, then you should watch this video right here where I break all that down in detail.

Of course, if you like this video, go ahead, please click that thumbs up button. And if you don’t like it, you can give me a thumbs down. That’s okay. But at least leave me a comment down below and tell me why. And of course, subscribe if you’re not already subscribed. And that’s what I got. All right. To your success. .

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.

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banks not counting U.S. government bonds calculating bank's money reserve change in bank's leverage ratio controlling inflation surprises investors effects of leverage ratio change Federal Reserve secretly boosting market risks of overestimating bank strength

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