{"id":28752,"date":"2017-12-11T12:27:50","date_gmt":"2017-12-11T17:27:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=28752"},"modified":"2017-12-11T12:27:50","modified_gmt":"2017-12-11T17:27:50","slug":"abracadabra","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=28752","title":{"rendered":"Abracadabra"},"content":{"rendered":"
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Abracadabra<\/a><\/h3>\n<\/div>\n<\/div>\n
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And so, as they say in the horror movies, it begins\u2026<\/em>! The unwinding of the Federal Reserve\u2019s balance sheet. Such an esoteric concept! Is there one in ten thousand of the millions of people who sit at desks all day long from sea to shining sea who have a clue how this works? Or what its relationship is to the real world?<\/p>\n

I confess, my understanding of it is incomplete and schematic at best \u2014 in the way that my understanding of a Las Vegas magic act might be. All the flash and dazzle conceals the magician\u2019s misdirection. The magician is either a scary supernatural being or a magnificent fraud. Anyway, the audience \u2018out there\u2019 for the Federal Reserve\u2019s magic act \u2014 x-million people preoccupied by their futures slipping away, their cars falling apart, their kid\u2019s $53,000 college loan burden, or the $6,000 bill they just received for going to the emergency room with a cut finger \u2014 wouldn\u2019t give a good goddamn even if they knew the Fed\u2019s magic show was going on.<\/p>\n

So, the Fed has this thing called a balance sheet, which is actually a computer file, filled with entries that denote securities that it holds. These securities, mostly US government bonds of various categories and bundles of mortgages wrangled together by the mysterious government-sponsored entity called Freddie Mac, represent about $4.5 trillion in debt. They\u2019re IOUs that supposedly pay interest for a set number of years. When that term of years expires, the Fed gets back the money it loaned, which is called the principal. Ahhhh, here\u2019s the cute part!<\/p>\n

You see, the money that the Fed loaned to the US government (in exchange for a bond) was never there in the first place. The Fed prestidigitated it out of an alternate universe.<\/p>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Abracadabra And so, as they say in the horror movies, it begins\u2026! The unwinding of the Federal Reserve\u2019s balance sheet. Such an esoteric concept! Is there one in ten thousand of the millions of people who sit at desks all day long from sea to shining sea who have a clue how this works? Or […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[49,303,449,17443,17444,662,8625,3650,843,2202],"class_list":["post-28752","post","type-post","status-publish","format-standard","hentry","category-economics","tag-balance-sheet","tag-fed","tag-james-howard-kunstler","tag-magic","tag-monetary-magic","tag-quantitative-easing","tag-quantitative-tightening","tag-us-federal-reserve","tag-us-government","tag-us-treasury"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28752","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28752"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28752\/revisions"}],"predecessor-version":[{"id":28753,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28752\/revisions\/28753"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28752"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28752"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28752"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}