About That Fed Meeting…

Yesterday (Wednesday) the Federal Reserve concluded their meeting with little to no fan fare, except for the usual presser with its now laughably slavish reporting via the mainstream business/financial media’s deep probing questions, similar to asking if Mr. Powell had: “Red or white wine with lunch?” Along with the requisite follow up: “And do you recommend the veal?” Using a term like “pathetic” to describe it would be an understatement. But I digress.

So, with the above for context, I’m going to lay out two very specific items for your consideration. The reason for it is self evident: Because, if you think the so-called “smart crowd” of today’s mainstream business/financial media has any clue? Just go and watch a replay of the presser for yourself. i.e., “Red or White?”

Here’s the first…

Why is it the Fed feels the need to now make available a permanent (yes, permanent, not temporary as it has done previous) Repo-market facility and operation for international usage when markets are at their all time highs, globally?

The second…

The only times in recent memory (think last three market convulsions beginning with the Great Financial Crisis) that these were created was during market upheavals and were created (implied) on a strictly temporary basis. Why now? Does the Fed see something and not telling anyone and preparing?

Here’s my two-cents…

China and Bitcoin have the potential to rail the “markets” and probably are.

Suddenly, people with investments in China (think: institutional investors, corporations et. al.) are finding out that a communist country run by a communist government doesn’t give a rats arse about whether or not one’s “investment” remains solvent unless that solvency is in direct proportion to the dear-leader’s sure footing on power. And China, today, is now making that very, very clear. And there’s panic in the air. It’s becoming so thick you can smell it. That is – if one lifts their head up, rather, than navel gazing, which the media seems incapable of.

Another..

Again, suddenly, Bitcoin™ is “On the move!” racing out of its languished state for months and probing to break out above $40K to “Infinity and beyonddddddd.

Question: Why now?

Hint: It is becoming apparent via the regulatory agencies that the now sweetheart of crypto’s known as “Tether™” may be a total fraud. Why?

(Excuse me if I make more typos than the usual, because I can’t type this without laughing incessantly.)

Tether, allows (my opinion or summation) one to deposit real cash money and in turn, gives you a token that you can go out and buy other cryptos with, such as Bitcoin. In other words: It turns your cold-hard-cash into a crypto (or “token” as they say) so you can buy other cryptos. But, your “token” is (purportedly) tied for its valuation not to another crypto that is supposedly going to be rocketing to the moon and replacing “cash.” No, your token is tied to actual cash as in $dollar, that’s held in a bank, in the Bahamas’, with little to no real oversight outside of that country.

So, what could possibly go wrong, I ask?

Hint…

Suddenly no one seems to be able to find out where, what and how all that cash is, that they deposited in that Bahama bank.

Stop me if you heard stories like this one before, that is, if you can stop laughing for just a moment. To wit:

According to Bloomberg™: The US Justice Department is investigating possible bank fraud by executives of Tether Ltd. “Federal prosecutors are scrutinizing whether Tether Ltd concealed from banks that transactions were linked to crypto, said three people with direct knowledge of the matter who asked not to be named because the probe is confidential.”

Guess when that announcement became public? Here’s a picture that lets you see all you need to know about why Bitcoin suddenly rocketed skyward. Again, to wit:

(Chart Source)

So, the obvious question to those that may not fully get the gist of all this: “If that’s an issue with Tether, then what does that have to do with Bitcoin?”

Great question, and it’s this…

Tether is said to be used as a “feeder” to buy Bitcoin in ways to manipulate it aka scamming it to go higher. It also would be the most obvious place to move anything that one may have in Tether out, and put into “safety,” away from the prying eyes (or hands) of any seizures. That’s why the sudden spike. Again, it’s all my conjecture. However, I seem to be one of the only one’s thinking any of this through in respect to the so-called “smart crowd.” All they seem to be concerned with is “the veal.”

Here’s another aspect to this…

The fact that Secretary Yellen, herself, has raised the issue with the FSOC (Financial Stability Oversight Council) concerning crypto assets should be something setting off alarm bells for those such as Twitter™, Tesla™, Square™ and others that are holding assets in crypto, not forgetting all the investors holding those companies themselves.

What happens if there’s a sudden equivalent “bank run” in the crypto space that takes the entire crypto complex down in unison, something bordering on systemic? Think: corporate and bank balance sheets that have declared these as valued investments on their own balance sheets for stock investors.

Can you say: Uh-Oh?

I’ll leave today with making this last statement.

As I said in a prior article: Do you remember what was the driving force behind the Financial Crisis that caused the full on panic? A: Money Markets “breaking the buck.”

So I guess the lede from Reuters™ means nothing, correct? (Bold and emphasis mine)

(Reuters) -The Federal Reserve announced on Wednesday it will establish separate domestic and international standing repo facilities to backstop money markets during times of stress.

But then again…

What do I know.

© 2021 Mark St.Cyr

Note: This is not trading or investing advice of any sort. This commentary is for “big picture” discussion purposes only. Please read, or re-read the “About This Site” page for any questions or clarifications.