The Fed’s monetary war

Financial Times/Marcello Minenna

graphic image of a gold printing press“Within the QE, US Treasuries make up the lion’s share: $1.64tn of purchases in just three months which, added to the $2.47bn already in the portfolio, mean the Fed holds over a fifth of the overall federal debt. Formally it isn’t a monetisation, but it’s clear that by now an important part of the US public debt has been nationalised on the central bank balance sheet.”

USAGOLD note:  Minenna is the general director of the Italian Customs and Monopolies Agency, so these are not off the cuff remarks but instead ruminations of someone with a hands-on understanding of the situation. As he points out, Fed policy is not directed simply at domestic banks, but those in other currency areas as well.  The dollar, he points out, is holding up well “for now” because of its exorbitant privilege status, but “some are beginning to wonder how long it will last.”  Call Fed policy what you will, it all comes back to Bank of America’s recent observation that it can print fiat money, but it can’t print gold.

Repost from 6-23-2020

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