$4.4 trillion that could have gone to charity
For individuals, cash is a scarce commodity. I have to earn it by working, and only get to keep what is left over after taxes are taken out from the federal government, state government, and local government. For central banks, cash is an infinite resource that can be created and distributed at the will of a small group of people. The Federal Reserve balance currently stands at well over 4 trillion dollars. Four trillion that was created without work, by simply deciding to create it and spend it on various assets. Theoretically, there are laws that specify where that created money can be spent, but those laws have been bent and broken since 2008 to support failed hedge funds, failed insurance companies, failed banks, failed brokerages, failed mortgages, and more. Really, there are no apparent limits.
I am all for charities, and I am willing to donate material goods and time to certain causes, but it makes no sense to donate something that is infinite, but made artificially scarce for me. Looking at the balance sheets of central banks around the world, you get a sense of what is important. For the Bank of Israel, it's Apple stock. For the Bank of Japan, it's Japanese treasury bonds and stock ETFs. For the Bank of England, it's corporate bonds, and for the Federal Reserve, it's mortgages and treasury bonds. They could just as easily have credited the bank accounts of charities.
Future solicitations I get for cash donations from a charity I will refer to the Federal Reserve for a portion of their divine trillions of cash from the void.
For individuals, cash is a scare commodity.
ReplyDeleteFreudian slip? Hahaha!
We had roughly 180 trick or treaters show up at our door last night. Our neighborhood is fairly popular. They show up in minivans and pile out.
Although each and every one of them was looking for a handout, not one asked for cash. Perhaps cash isn't a "scare" commodity after all!
What can I say? Sorry about that. I love puns! :)
For the record, I did not spot the "scare" until my second reading of it. I saw what I expected to see: scarce. Perhaps Halloween heightened my pun senses though, lol.
And lastly, holding cash in short-term treasuries while anxiously awaiting interest rate hikes has got to be scary for many. Patience is not a virtue when it comes to timing "sure things". They've seen both the stock market and the bond market go up without them for years and all they have to show for it is a 0.01% yield on the 3-month treasury bill? Scary!
Had I moved permanently to short-term treasuries when I turned bearish in 2004 as was endorsed by deflationist Robert Prechter, then I'd definitely be looking for a job right now (due to the seriously dwindling nest egg). How's that for scary! Sigh.
I never could understand why he, as a deflationist, would not endorse the long bond! Surely he must have realized what would happen to long-term treasury rates if everyone (including the Fed's charity case) piled into short-term treasuries.
Stagflationary Mark,
DeleteGood catch! I should have known to be careful posting on a Frightday. Well, money is scary now, more than ever going back to probably 1971. The BOJ's tricks are getting as scary as Nixon's.