I agree with the notion that the Fed is ‘trapped’ but not at all with the reasons offered.

They are trapped because they have not reacted quickly enough to the narrative meta-game here.

And that’s tough, because narrative shaping is one of their key tools.
During the infamous March unwind, we were in a tough spot - a spot that could have truly mangled balance sheet in a way that might not have been recoverable.

So the Fed backstopped those balance sheets (corporates and SMBs) because that’s their damn job.

But that’s not all.
The threat of deflation was very scary (a fear I view as reasonable) so they brought out the narrative cannon too.

They went on TV and talked about how they’re printing money. A “we will print forever” press junket that one must assume quite deliberate.

And we believed.
Oh how did we believe!

This narrative shaping hit precisely at a time when a new cohort of financial aspirants (also social media savants) also had a vested interest in the same message.

So when the Fed pulled out the loudspeaker, they also did it in an amphitheater.
And as that message found sympathetic resonance with this new cohort and their unquestioned prowess at social media (the printing press/radio level comms amplifier of our day), the message came out… well, a little shouty, even for those desperate times.
And still it echoes.

For it is the message this new cohort *wants* - it is the beautiful dystopia they seek, after a lifetime of being fed happy horseshit by their boomer parents.

And so as the Fed attempts to pivot their narrative shaping, this cohort denies them the floor.
And now, instead of a sympathetic resonance that amplifies their efforts, we have the opposite.

The Fed, only recently the headline act, has been denied the microphone.

Their message is being cancelled.
Just 18 months ago they told us they were gonna let this sucker rip and we got on board.

And now as they tell us it’s transitory (because it fking is) we laugh at them and label them a pariah.

Why? There is no why, other than it doesn’t fit our vision.
The Fed knows they need to turn the narrative, and they need to do this to *prepare the economy* because right now we are too lopsided.

The banks know, of course (they’re stacking USTs), and genpop is as yet unprepared for what awaits us next.
And if the Fed could help them prepare we could bring this sucker in for a slightly easier landing instead of just plummeting from these heady heights.

But the Fed had lost the mic.

Look at yourselves: you have cancelled the Fed.

It’s incredible really. And here they err.
For if the Fed has made a mistake here, it’s not recognizing that they have lost the floor.

They stand at the front of the room like a feckless professor in a room full of students doing bong rips, insisting we get back to the lesson plan.

They need to a new comms plan.
I don’t know what it is, but this one ain’t working.

And you can see it - the Fed governors are out there test ballooning wildly different messaging to see what gets uptake.

And so far nothing. We have rejected their overtures for communication.

It’s very dangerous.
A population unprepared for the supply side rebound will get carried out in a systemically undesirable way.

I know y’all don’t think they care or even are malicious actors but that just nuts IMO.

They just wanna run the machine and they are struggling with the speed wobbles
So I think it is time for a desperate act.

I think Fed should come out and say they’ve lost control.

It’s the right counterplay to psychology here, because a much as people hate on the Fed they absolutely believe forward inflation is a given.
And what is stabilizing that view now is the Fed *saying that it’s not* and us petulantly rejecting that view, because WE observers are CERTAIN that THEY are wrong, and that they are wrong in a predictable and stable fashion.

So the Fed should fade our psychology.
For decades the institution has been a source of calm assurance and confidence.

But confidence is what’s toxic right now, and the medicine would be to make us all more wary. Not “wary of deflation” or any specific thing, just wary.

We need rousing from our slumber.
And so I’d like to see them throw a haymaker.

Just roll out and say “yeah so look we have no idea going on here.”

It’s what we want. You can feel it right? How refreshing it would be?

That feeling isn’t because it’s “true.”

It’s just the medicine we need here and now.

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More from @coloradotravis

9 Oct
Okay so here’s the view I don’t agree with and why this view of “lending” is broken.

Part of underwriting is evaluating the pledged collateral and the risks associated therewith.

You cannot simply lend against current value without scenario modeling that’s nuts.
Underwriting incorporates a lot more than just “here’s a thing worth X” - it factors in future possible worths of said thing, as well as **other recourse pathways** (to the individual) in the event of a future delta in value.

Like that’s what underwriting is.
You underwrite the *borrower* as a *person* who has the ability to repay.

What crypto is doing is underwriting the *asset’s future value.*

That is bonkers! Lol! You all are literally replicating the mortgage crisis, in which forward asset values were presumed inviolable!
Read 4 tweets
8 Oct
Man the reductionism never ends.

The illusion that either the Treasury or the Fed has sole responsibility for "the money" is just a total failure of framing.

It's both. And with a bit of finesse, we might even understand why the Treasury's powers are now in focus.
For you see the Fed's tools are about tweaking the aggregate incentive structure for *private* lending.

Private market lending is priced against 'risk free' (UST) yields, and the Fed can fiddle with this of course by raising or dropping rates.
Let's walk this out.

Imagine the Fed raised rates to 10% - what would happen?

Well yes, there would be damage because a lot of people who are expecting to be able to "roll" (refinance when it's due) their debt would have a tough time doing that.

Read 17 tweets
7 Oct
Periodically I am asked if I can point people in the direction of learning philosophy.

I’ve thought about this and I’m not sure I can, but perhaps I can unpack why not.
Philosophical training is not unlike the marines or something, but for the mind. It’s fairly grueling in some ways.

People who are your true betters intentionally dismantle you, and then build you up.
I assume the Agoge of the Spartans was more cruel than the training of modern Marines. But the Marines have no doubt refined it into an art form benefitting from two thousand years of learning about war.

And so it is with the philosophy.
Read 17 tweets
6 Oct
If you are a skeptic you must be stoic about it, or you should give up now.

You will never experience victory.

That’s not how belief works - I know many people who have had their beliefs challenged by reality.

Rarely has it changed their mind.

Social media worsens this.
Cialdini in his book “Influence” describes this as “commitment and consistency” - people who make public statements are unlikely to retract them.

The more public and more frequently, the less likely they are to ever change their beliefs no matter how what reality does.
If the apocalypse is supposed to happen Tuesday and doesn’t, there will be a reason why not.

And, in fact, the research suggests these belief challenges tend to *strengthen* belief rather than weaken it.

The battle is eternal and without a victory condition.
Read 4 tweets
4 Oct
Oh my god guys he's back.

Okay well look, while you're here mike I want to recap where things are at.
Okay first off here's what you said, and here's what I said which apparently made you hella angry

I don't really know why you're angry about this, but I'm not a shrink so let's just chalk it up to the great mysteries of life.
2/ ImageImage
Then you said this weird macho thing here, and I asked if you were high because... well uh... I'm not sure how to say this but uh... sometimes that behavior is associated with people who have recently "hit the slopes" you know?
3/ ImageImage
Read 7 tweets
3 Oct
Not sure I agree with you on this, good sir.

I’d hold that the there’s a lack of nuance implied in not understanding money’s lineage.

For money is and was always secondary to debt.
The historical record is quite clear about debt being primary - there never was a pure barter state. This is referenceable, and I’m happy to provide references if you like.

Money is simply little chits we use to settle debts, and debt is the primary trope.
Money, in practice, is as a “multiplayer abacus” which allows us to shuffle debts around more efficiently and sometimes anonymously as in the case of bearer asset variants (e.g. cash).

But money is simply a substrate that weaves together balance sheets.
Read 10 tweets

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