This from Luke Gromen on the point I made about the Fed enlisting the banks to buy all he government debt they need them to by reducing capital requirements for doing so:
“The comments above are essentially an admission from the Fed that they know there is no political will or economic possibility of cutting US government Entitlement or Defense spending, and so they are going to have to ignore the Basel rules in a manner that allows the US to sustain its debt and deficits at negative real rates. Practically speaking, that will likely eventually be something we highlighted in these pages a few weeks ago: Permanent Supplementary Leverage Ratio (SLR) exemptions for USTs for TBTF banks that will amount to permanent bank QE to finance structural US deficits at expedient rates.” Luke Gromen, Tree Rings April 12, 2024
This from Luke Gromen on the point I made about the Fed enlisting the banks to buy all he government debt they need them to by reducing capital requirements for doing so:
“The comments above are essentially an admission from the Fed that they know there is no political will or economic possibility of cutting US government Entitlement or Defense spending, and so they are going to have to ignore the Basel rules in a manner that allows the US to sustain its debt and deficits at negative real rates. Practically speaking, that will likely eventually be something we highlighted in these pages a few weeks ago: Permanent Supplementary Leverage Ratio (SLR) exemptions for USTs for TBTF banks that will amount to permanent bank QE to finance structural US deficits at expedient rates.” Luke Gromen, Tree Rings April 12, 2024