Video

Transcript

00:00
hey guys I just wanted to make this
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quick video because I think really
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annoying so I was reading this article
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here that you see up with on screen at
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Wall Street talking about the Fed's QE
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unwind reaches two hundred eighty-five
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billion dollars and you're seeing a lot
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more of this in the financial news right
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now because well the the bonds and
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mortgage-backed securities that that the
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Federal Reserve is holding are you know
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starting to roll over and let expire off
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the balance sheet that is the QE unwind
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so they're not cashing in the bonds that
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they're holding but you know when they
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come up to be expired they just don't
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renew that money and don't roll it over
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to the next next expiration period so
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far so good right so as a result you can
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see that you know the unwind has reached
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two hundred eighty five billion dollars
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here and we have seen interest rates you
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know go up pretty significantly over the
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last however many months that's been and
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you know this author's point wolf
01:00
Richter is pointing out that the way the
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language is constructed is that there's
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they're letting up to so many billion
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dollars unwind each month and that this
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was the first time that actually
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mattered so and I think I think you were
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saying October will be when they hit
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that number because of the bi-weekly
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roll-off kind of thing but this whole
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thing just strikes me as missing the
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point because yes so we're back to March
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5th 2014 levels on the Federal Reserve's
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balance sheet at four points one seven
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five billion our trillion rather dollars
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on the on the balance sheet and I mean
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that's all true as far as it goes but
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you know March 5th 2014 was well into
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the QE period so what I did is I went to
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the st. Louis Fed and there Fred
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graphing system and yes we are here
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right and yes if we go back to March of
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2014 then we reach that same type of
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number but let's go back
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you know financial crisis so we're done
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here at let's be generous call it one
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trillion dollars okay so right now we're
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at four point one trillion and to get
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back to the beginning of QE and
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unwinding the whole stimulus package we
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got to go all the way down from one
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trillion and I mean from the mark from
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the reaction that we're seeing in the
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market that this 285 billion dollar roll
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off has caused interest rates to go up
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and you're starting to see articles in
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the financial press about you know junk
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bonds
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you know yields going up which means the
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prices are going down and that bubble is
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starting to pop I've seen that language
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once or twice and we're starting to see
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real estate mortgage applications
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you know either rollover decrease so
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even the small change that we are seeing
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is already having significant effects in
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the in the financial markets so the
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chances that we could take four trillion
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down to one trillion without completely
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crashing the economy is slim to none
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basically and you know we've seen
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statements from the Fed chair Powell
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about how you know we're we still got a
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lot of upside in interest rates to reach
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the so-called neutral rates and yeah I
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don't really see that happening as soon
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as those rates start to climb a little
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bit you know towards that neutral rate
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then I think that will precipitate the
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next crash and I and I've said I don't
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think we're getting out of 2019 without
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a crash because either this process that
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we're looking at right here continues
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and rates go up or the Fed has to end up
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backtracking reducing rates and
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basically admitting defeat to the world
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in which case that could participate
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precipitate a crash so that's the way I
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see it anyway and let me know what you
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think