I don’t think RMP will be a major source of liquidity, it’s simply too small. At this stage, the most important change is eSLR, which would effectively distribute money printing power to commercial banks and the Treasury. The advantage of this approach is a clearer division of responsibilities and accountability. Even if Hassett takes office, the Fed can still maintain its neutral, data-driven, technocratic/academic image. Fed hates to be blamed for another QE or surrendering to Trump. As for how to get commercial banks to create credit, that will be the job of the Trump administration and the Treasury Department.
This uses humor and accounting to expose how much policy signaling is really a language game designed to manage perception rather than outcomes. By walking the plumbing step by step, it makes clear that the distinction between QE and RMP is rhetorical, not functional, once spending and balance sheet expansion enter the system. The argument that duration is a distraction, while liquidity routing is the real mechanism, is persuasive, especially when tied to Treasury buybacks and housing sensitivity. What sits underneath the bravado is a familiar conclusion: naming conventions change, incentives do not, and asset holders remain the primary beneficiaries of whatever acronym replaces the last one.
Great piece once again seeeeeer... I'm still laughing 🤣 at this part... "The RMP exists because the free market cannot handle the too beaucoup Alabama black snake..."
Any ideas or takes on Strategy and the impending MSCI January 15th deadline for inclusion/exclusion?
Potential death-spiral event or a nothing burger?
I don’t think RMP will be a major source of liquidity, it’s simply too small. At this stage, the most important change is eSLR, which would effectively distribute money printing power to commercial banks and the Treasury. The advantage of this approach is a clearer division of responsibilities and accountability. Even if Hassett takes office, the Fed can still maintain its neutral, data-driven, technocratic/academic image. Fed hates to be blamed for another QE or surrendering to Trump. As for how to get commercial banks to create credit, that will be the job of the Trump administration and the Treasury Department.
We’ll see what happens.
This uses humor and accounting to expose how much policy signaling is really a language game designed to manage perception rather than outcomes. By walking the plumbing step by step, it makes clear that the distinction between QE and RMP is rhetorical, not functional, once spending and balance sheet expansion enter the system. The argument that duration is a distraction, while liquidity routing is the real mechanism, is persuasive, especially when tied to Treasury buybacks and housing sensitivity. What sits underneath the bravado is a familiar conclusion: naming conventions change, incentives do not, and asset holders remain the primary beneficiaries of whatever acronym replaces the last one.
Great article Arthur!
Great piece once again seeeeeer... I'm still laughing 🤣 at this part... "The RMP exists because the free market cannot handle the too beaucoup Alabama black snake..."
hahahahaha
Another great essay, thank you
… the necessary combination of an ever-decreasing Bitcoin supply encountering an inevitably expanding pool of global US Dollar liquidity.
reya or bust
This is a great essay Arthur!
nice