$NKN
Wosh supports! After 75 years, the Federal Reserve and the Treasury have signed an agreement again, as $30 trillion in U.S. debt welcomes reconstruction.
Trump nominated Wosh to serve as the next chairman of the Federal Reserve, a proposal that could rewrite the financial landscape of 75 years, igniting Wall Street—replicating the historic agreement of 1951, reshaping the relationship between the Federal Reserve and the Treasury, directly stirring the $30 trillion U.S. debt market.
Wosh explicitly advocates that the new agreement will clearly define the scale of the Federal Reserve's balance sheet and be highly coordinated with the Treasury's bond issuance plan, in order to correct the blurred institutional boundaries caused by excessive QE during the financial crisis and the pandemic. U.S. Treasury Secretary Yellen similarly opposes long-term quantitative easing, only supporting coordinated actions in emergencies, with both holding a highly consistent stance.
The market has already priced in the huge changes: the Federal Reserve's holdings are likely to shift from medium- and long-term government bonds to short-term Treasury bills. Deutsche Bank predicts that over the next 5-7 years, the proportion of Treasury bills in the Federal Reserve's holdings may surge from less than 5% to 55%, and MBS may also be swapped with the Treasury, completely reconstructing the supply-demand structure of U.S. debt.
But huge risks and controversies run parallel: this move is seen as a de facto yield curve control, with deep binding of monetary and fiscal policy, which may severely erode the independence of the Federal Reserve, raise inflation expectations, and shake the global safe-haven status of the U.S. dollar and U.S. debt. Faced with approximately $1 trillion in annual debt interest costs, is strengthening coordination a good way to control costs, or a risky game of overdrawn national credit?
After 75 years, establishing new rules for monetary and fiscal policy: is it a return to policy discipline, or does it plant the seeds for market turmoil? What do you think of this wave of reconstruction of global liquidity's underlying logic?
#BTC When will it rebound?