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Dec 16, 2022Liked by Peter Nayland Kust

I think the Fed could easily push interest rates much higher if they really wanted to. They have something on the order of $8T in assets that they could sell. I don't know how much they'd have to sell, but a trillion or two over the course of a few months would certainly do the trick.

Of course there's a small problem with this approach. The more they sold and the higher the rates went as a result, the lower the market value of their remaining assets would go, because virtually all their assets were purchased at lower rates. This would quickly destroy what little equity they have on their balance sheet and then they'd technically be insolvent, which would be an interesting situation.

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I heard a far greater unemployment rate was their desired aim. And we can figure out why.

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