But if the government moves funds from the TGA to buyback bonds from the private sector, that shouldn’t affect the assets/liabilities of the Fed as a whole right?
Great one again, thanks! Like the explanation of swap spreads.
I can't really grasp what your point about gold/equities was about.
For me gold had its run on a bouquet of themes, then some buyer exhaustion or profit taking this year and now the debasement theme drove it higher again, but we will see how long this lasts. The run in the stockmarket was enabled by the believe that it will be backed by the gov., so i am not surprised that equities don't do that much now.
I just think these themes are convenient ways to explain price. When it doesn't suit (why is gold selling off during a war?) they are explained away.
Ultimately equities and gold will benefit from a greater stock of debt over time. More money chasing the same gold. It will underperform equities but still go up. Some people call this "debasement", but the whole world is amassing debt so who exactly is debasing against who?
The TGA is invested in bonds? How does that work??
Bank reserves and the TGA are the liabilites of the Fed, government securities and gold are the assets
But if the government moves funds from the TGA to buyback bonds from the private sector, that shouldn’t affect the assets/liabilities of the Fed as a whole right?
It definitely does. If one side of the balance sheet shrinks, the other must as well!
Great one again, thanks! Like the explanation of swap spreads.
I can't really grasp what your point about gold/equities was about.
For me gold had its run on a bouquet of themes, then some buyer exhaustion or profit taking this year and now the debasement theme drove it higher again, but we will see how long this lasts. The run in the stockmarket was enabled by the believe that it will be backed by the gov., so i am not surprised that equities don't do that much now.
I just think these themes are convenient ways to explain price. When it doesn't suit (why is gold selling off during a war?) they are explained away.
Ultimately equities and gold will benefit from a greater stock of debt over time. More money chasing the same gold. It will underperform equities but still go up. Some people call this "debasement", but the whole world is amassing debt so who exactly is debasing against who?