The Federal Reserve is stuck. There is no way to raise interest rates without crashing the market. That was made clear in late 2018. The Fed balance sheet must continue to rise towards infinity in hopes that it is enough to goose the financial system forever. Even that hasn’t been enough for the repurchase markets, which have inexplicably required perpetual cash infusions for the better part of a year. A Fed-driven free money market relies in large part on rate reduction.
How do you reduce rates when rates are at zero? You go negative, expecting to pay people to borrow money from you. At a nominal rate just under zero, that’s viable for a little while as an implicit convenience, deposit, and hospitality fee. But lending rates throughout the financial system are tied to the funds rate. Who is going to put money in commercial banks when the nominal yield is below zero and the real yield is even further below zero? The better move is to literally stuff money under your mattress.
Unless there is no money to stuff, that is. Talha writes:
An interesting thought I had recently; the convergence of the get-rid-of-historical-White figures and the question of them being ubiquitous on our currency…
I mean, I can actually now imagine a scenario where the elites push for dropping cash completely and going entirely onto electronic currency because of all the troublesome old white men on coins and dollar bills and the fact that overhauling everything (by reprinting and replacing everything out in circulation) is just too large a task.
Washington, Jefferson, Lincoln, Jackson, and Grant have all been besieged. Hamilton and Franklin remain standing for the time being. Eisenhower alone [edit: and maybe FDR–thanks to Count of Monte Burger for catching my mix up] may survive on account of beating the Nazis and sending the national guard into Arkansas. Can a cash economy reliant exclusively on dimes and dollar coins survive? Even then, there’s a paper solution!
As I’ve admonished before, once the move to pull cash out of the economy is made, it’s time to pour everything into inflation hedges–gold, crytpos, whatever–because modern monetary theory is a reality and the gullibility of our nation’s creditors has finally come to an end.