This is a very useful breakdown of the Fed’s balance sheet mechanics. But from an Austrian perspective, the balance sheet itself is not the core issue.
The deeper problem is the structure of the economy that has gradually developed since 1971, when the dollar was severed from gold and the monetary system moved fully into the fiat era.
For more than five decades, interest rates have been increasingly shaped by policy rather than by genuine time preference and savings. Over time, this has reshaped the entire capital structure of the economy. Asset valuations, government debt dynamics, venture funding, and real estate markets have all adapted to a world in which credit expansion repeatedly cushions downturns.
This creates a dilemma for central banks. When policy tightens, the fragility of those structures becomes visible. When policy eases again, the distortions grow even larger.
That is why the balance sheet never truly returns to its previous level. Each cycle requires more intervention than the last.
For investors, the key question is not the exact size of the Fed’s balance sheet, but how five decades of monetary intervention continue to shape valuations, risk-taking and ultimately the purchasing power of money.
"The Fed has not been buying in the Treasury market since 2022 (they have been selling)"
Small nitpick here. The Fed mostly allowed bonds to roll off, via maturity, and not replace them. Two very different things, but the result -- removing cash from the system -- is the same.
I listen to a lot of the articles with the substack app text to speech feature. It always reads “Peter Schiff” in a German accent for some reason, hilarious every time.
that's why most of us are not selling our gold and silver when the market declines. There is little option for the future other than higher prices for gold and silver.
The federal deficit for 2026 has been forecast to exceed $1.5 Trillion and that was before the action began in Iran. More than likely that deficit will now be closer to $2 Trillion, which will require the Fed to buy more, either directly or thru their reverse repo program
Yahooooo, its a race to the bottom.
This is a very useful breakdown of the Fed’s balance sheet mechanics. But from an Austrian perspective, the balance sheet itself is not the core issue.
The deeper problem is the structure of the economy that has gradually developed since 1971, when the dollar was severed from gold and the monetary system moved fully into the fiat era.
For more than five decades, interest rates have been increasingly shaped by policy rather than by genuine time preference and savings. Over time, this has reshaped the entire capital structure of the economy. Asset valuations, government debt dynamics, venture funding, and real estate markets have all adapted to a world in which credit expansion repeatedly cushions downturns.
This creates a dilemma for central banks. When policy tightens, the fragility of those structures becomes visible. When policy eases again, the distortions grow even larger.
That is why the balance sheet never truly returns to its previous level. Each cycle requires more intervention than the last.
For investors, the key question is not the exact size of the Fed’s balance sheet, but how five decades of monetary intervention continue to shape valuations, risk-taking and ultimately the purchasing power of money.
International "holders" will b international dumpers, then what?
"The Fed has not been buying in the Treasury market since 2022 (they have been selling)"
Small nitpick here. The Fed mostly allowed bonds to roll off, via maturity, and not replace them. Two very different things, but the result -- removing cash from the system -- is the same.
I listen to a lot of the articles with the substack app text to speech feature. It always reads “Peter Schiff” in a German accent for some reason, hilarious every time.
The debasement of the value of the currency will NEVER stop until Hyperinflation occurs and the entire financial system collapses.
that's why most of us are not selling our gold and silver when the market declines. There is little option for the future other than higher prices for gold and silver.
The federal deficit for 2026 has been forecast to exceed $1.5 Trillion and that was before the action began in Iran. More than likely that deficit will now be closer to $2 Trillion, which will require the Fed to buy more, either directly or thru their reverse repo program
Does it matter - we will control majority of the oil soon.