In this video I discuss how the change in money has altered the Fed's role as "insurance company". It also has made the monetary policy of the Fed mostly useless other than propaganda.
▶️ 3Speak
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I really appreciate this content, I mean it has explained everything about the fed . Let's keep our heads up for changes in anticipation
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Looking at the news in the Philippines, companies are still putting too much weight at the Fed rates and decisions. I can see why it can be propaganda, and it is frustrating how they are able to affect other countries.
Summary:
In this video, the host Taskmaster4450 provides a detailed explanation of the Federal Reserve's (the Fed) original purpose and how it has evolved over time. The key points are:
The Fed was initially set up as an "insurance company" for regional banks, providing liquidity support when needed. This was done by the Fed purchasing the commercial paper (debt) of troubled banks.
In the past, this liquidity support was provided through the Fed printing physical banknotes. However, today the Fed provides liquidity by adding reserves to the troubled bank's balance sheet instead of printing cash.
The host explains that the misconception around the Fed "printing money" is flawed, as the reserves added to banks' balance sheets are not the same as printing physical currency that can circulate in the economy. Reserves are not legal tender.
The host argues that the Fed has strayed far from its original purpose, with presidents over the years making changes that have undermined the Fed's independence. The host believes the Fed's current monetary policy is "fantasy" and "propaganda" that is largely ineffective.
The host also discusses how banks today, especially smaller regional banks, have started behaving more like hedge funds rather than traditional lenders. This has led to issues when their long-dated assets like Treasuries and mortgage-backed securities lose value.
Overall, the video provides a critical analysis of the evolution of the Federal Reserve system and how it operates today compared to its original design.