Goldtent TA Paradise

Fed Balance Sheet Down to $3.94 Trillion

1. Curly Top says:

   April 6, 2019 - 8:48 am at 8:48 am

   For those, like me, who concluded that gold was the safer investment because the FED was destroying the value of the dollar by amassing too large a balance sheet of assets of questionable value, this news may be somewhat of a surprise. The amount of such assets is clearly being reduced, although the value of what remains is still in question imo. And if QE is needed again to boost the economy or equity markets, the Fed’s BS can go up again. But if the Fed keeps this up, that would add considerably in my mind to the dollar’s worth.

2. pedro_deleon says:

   April 6, 2019 - 4:06 pm at 4:06 pm

   I’ll be hyperbolic, but the Fed is (currently) irrelevant.
   Its all about CHINESE credit creation (and BOJ and ECB).
   The equity ramp since late Dec is entirely thanks to PBOC and BOJ.

   Credit may be created THERE, but its finding its way HERE.
   Some of that is REFUGEE capital. MIGRANT capital. There is no WALL.
   So with limited barriers to the free flow of capital, credit is fungible, no matter its origins.

   Folks are pointing to Jay … you flipped … but it was the Chinese who ACTED.
   Shanghai Accord 2.0.

3. Curly Top says:

   April 6, 2019 - 8:53 pm at 8:53 pm

   That’s a very interesting observation. Are you talking about Yuan credit that becomes dollar debt? What’s the mechanism?
   But if you’re mainly talking about the CB’s playing musical chairs–one tightens while the others don’t–I don’t see why that shouldn’t currently be dollar positive. But the Yuan and Yen don’t figure so much into the DXY so perhaps these things are hidden.

4. pedro_deleon says:

   April 7, 2019 - 6:46 pm at 6:46 pm

   That’s a very interesting observation. Are you talking about Yuan credit that becomes dollar debt? What’s the mechanism?

   Go the red text first for thesis here

   https://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.htmlhttps://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.html

   As for the mechanism, he’s been writing about the way the Chinese have worked their dual exchange rate for awhile, but I can’t give you a summary.

   • pedro_deleon says:

     April 7, 2019 - 6:47 pm at 6:47 pm

     sorry .. link got posted twice …

     https://deep-throat-ipo.blogspot.com/2019/03/a-modest-proposal.html

     • Curly Top says:

       April 8, 2019 - 9:41 am at 9:41 am

       Hi PDL, thanks for the link. I’ve known about the Triffin paradox for some time and understood the long-term negative consequences for a country whose currency(gold-backed or not) serves as the reserve. I say you take the good with the bad. We’ve taken the good for at least half a century and now it’s time for the bad. By definition, a regime like Bretton Woods couldn’t serve much beyond an immediate post-war world, so why all the sturm und drang now? Time for something new. Vested interests will shriek blue bloody murder but what’s new in that either? Onward to the future. (Let’s just hope the future isn’t something silly like bitcoin.) Speaking of paradoxes, I notice that CB’s(and perhaps in some cases countries) are increasing their gold reserves, but if not, are loathe to reduce them (aside from Canada, which is often exceptionally silly.) Perhaps there’s nothing new under the sun after all, and we just happen to be alive to witness this phase of the cycle. Someone born today will not likely have to contend with currency regimes. We’re likely to be on a new one by the time he/she reaches adulthood. Sorry for the long treatise but we have to cope with collapse somehow. So I take the big picture.