The Federal Reserve was created in 1913 to "promote greater financial stability and avoid banking panics..."
But how**?
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🤔
🧵👇 1/
**hypothetically speaking; everyone, except them apparently, knows they do the exact opposite of that stated objective😪
2/ first, here's how the fed defines financial stability:
"when financial institutions and markets are able to provide to communities and businesses products they need to invest, grow and participate in a well-functioning economy."
in other words; no one goes belly up. cool cool
3/ In this definition, they are referring to financial intermediaries of all shapes and sizes:
4/ They also state that "any disruption to the functioning of these intermediaries between borrowers and lenders can carry a very high price".
In other words, the Fed would be negligent in promoting stability if, say, ppl stopped borrowing while needing capital. Ring a bell?
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4a/
As a matter of fact this exact situation is happening not just at the institution level, but at the country level; check out @jameslavish 's thread on nation state debt spirals if you haven't seen it yet:
5/ So how do they <think (since we know they don't actually)> do this?
They look at 4 components:
1. Asset valuation and risk appetite 2. Financial System Leverage 3. Funding risk 4. Borrowing by businesses and households
Let's look deeper at each one:
6/ (1)Asset valuation rising "constitutes vulnerability because unwinding of high prices can be destabilizing to the economy, especially if assets are widely held and values supported by excessive leverage or risk opacity"
sooo like the stock and housing and everything bubble?🤔
7/ (2) financial system leverage refers to when banks, insurance companies, hedge funds, and other financial institutions have significantly more debt than equity.
is this happening anywhere right now? in the world? anybody know? Asking for a friend...
8/ (3) Funding risk refers to the potential for banks to experience a "run" by investors.
If you missed our breakdown of the bank runs of the 1930s, and their parallels to today, read this to see why we're RIPE for this exact situation today:
9/ (4) borrowing by businesses and households:
"if credit exposure in households and non-financial* businesses is high, borrowers often curtain spending and disengage from economic activity..."
*b/c you know, financial biz's CAN NEVER have too much debt... see why later.
10/ so now that we've covered the things they "look for" (read: actually cause to break), let's see what their proposed responses are.
TDLR: BRRRRRRRRRR (2020 version of brrr was 3 R's).
11/ The Fed has the authority during times of crisis to provide liquidity and "is empowered to be the lender of last resort (LOLR) [seriously, that's their acronym for it... they mock us] and uses different tools to fulfill this role."
How does the Fed act as LOLR?
CTRL+P
12/ Their entire premise is summarized in this statement (again their words, not ours)
"when a major shock occurs that severely stresses the financial system, people need access to money and credit. Indeed, having liquidity available can restore calm to markets..."
😪
13/ To summarize: The Fed, through monetary policy, create the conditions for the things they list as the MAIN RISKS TO INSTABILITY,
then to fix the problem <checks notes>
does MORE of the activities that caused those issues in the first place
🤡🤦♂️
14/ The result: mass chaos in markets, no true way for any business to measure the true cost of capital and conduct economic calculation, and business cycles that only exist because... the Fed exists.
15/ But don't take our word for it... listen to the 2nd largest US Bank on current state of financial stability today; THE VERY THING the Fed is "watching for"...
🚫 lender of last resort
🚫management of monetary policy that causes more of the thing that you're to get rid of in the first place
🚫 meetings in Jackson Hole
✅Code and Math.
17/ We hope this was informative!
Help us share the knowledge by liking and retweeting the tweet below to help us spread the knowledge people need to #endthefed
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As we approach Thanksgiving in the US, a full year removed from #bitcoin ‘s ATH, having a conversation about it with precoiner friends and family can be difficult.
Here are 10 helpful tips to have robust #bitcoin conversation during Thanksgiving
🧵👇🏽
1/ Be aware of how knowledgeable you are relative to the general public.
Be empathetic. 4 years ago even you would call yourself crazy for believing, let alone preaching bitcoin.
It will take time for the world to catch up to our knowledge and thus our conviction.
2/
Focus on first principles.
When they tease you about bitcoin-usd exchange rate, don’t take the bait.
We are incredibly excited to introduce Coinbits 2.0 - supercharged and ready to help you build wealth with #Bitcoin
🚨 And for a limited time, there will be a NO FEE bitcoin-purchase opportunity 🚨
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We have been hyper-focused on solving a very specific problem: making bitcoin user-friendly.
We are doing this systematically, and with the help of you, our users, we carefully considered every detail in designing a new interface optimized for clarity and speed.
Have a look 👇
The new dashboard is balanced and uncluttered. Navigating Coinbits is now easier with a sidebar with a clear hierarchy.
You've probably been too busy following the #FTX drama to have noticed some news this week:
The NY Fed along with Citi, HSBC, Mastercard, Wells Fargo and others are starting a 12-week digital dollar #CBDC pilot study.
Big deal or NBD? Get your ☕️ and follow along:
🧵
1/20
2/ IMPORTANT CONTEXT (you'll see why later)-
The BIS (the final boss for #bitcoin imho), issued a 41 page report titled "The Future Monetary System" showing their vision for a central bank issued CBDC, which this pilot stems from.
3/ This project is piloting the "regulated liability network": to test how banks can use a tokenized USD in a distributed database, to "help speed up payments and settlement time in currency"
US CPI in October was 7.7% but there's a hidden reason to believe that we're very close to a local CPI top.
Starting in January 2023, the BLS plans to change the CPI calculation (again), which will likely (and not surprisingly) lower the CPI prints.
What are they doing?
🧵👇 1/
2/ first, ICYMI: CPI calculation changes aren't new. As a matter of fact, the calculation is ever changing, which is 1 of #bitcoin ers main issues with it.
We've covered the changes of the CPI calculations over the years in this thread; have a look:
Starting with the January 2023 data (reported in Feb 2023), the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data.
We are heading down a slippery and dangerous slope:
Governments worldwide have unmanageable debt & rising rates make matters worse.
While the future is uncertain, there aren't many possible outcomes.
Why & How Governments Fail Financially
(and how #Bitcoin fixes this)
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1/14
2/ There are 2 main ways governments can financially fail.
1. lose ability to meet obligations to repay debt
2. fails to reassure the public that the value of its currency can still be trusted, leading to hyperinflation.
6 countries have never (yet) defaulted on their debt--
3/ Those countries: NZ, AUS, CAN, Thailand, Denmark and the US. For now.
Both causes involve loss of trust.
When a government loses trust through incompetence, corruption, or as a result of a war loss, chaos typically ensues.
Currently:
War✅
Incompetence ✅
Corruption ✅
😬
🚨🚨🚨🚨🚨🚨
This Friday we will be announcing Coinbits’ newest ambassador and talking to him/her about a variety of topics.
To celebrate this occasion we are giving away 200,000 sats.
Rules below⬇️⬇️⬇️ twitter.com/i/spaces/1ZkJz…
50,000 sats giveaway rules.
To be eligible for 1 of 3 50k sats prizes: 1. Like and retweet the above tweet. 2. Follow us on Twitter @CoinbitsApp 3. Tune in to our space on Friday
An additional 50k sats will be awarded to the 1st person who
guesses the ambassador correctly before our announcement in reply to this thread⬇️
We will post a new clue about this person’s identity every day leading up to Friday in this thread⬇️⬇️⬇️
1st clue: initially read @saifedean ‘s TBS this year. 👀