Doesn'T a central bank buy gvt bonds as well?

I think the Fed does have an incentive to help the government’s debt servicing even when it goes against their stated “dual mandate” of 2.5% inflation target and full employment. I’m skeptical of the de jure distinction that the Fed is a “separate, private entity” that independently acts to achieve its dual mandates.

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13.11.2023

horse-shaped-smyl

Sam Kazemian ¤⛓️¤
I think the Fed does have an incentive to help the...

What would the incentive be though? It can't be to keep their independence since adjusting rates with the government's debt in mind would be breaking that very thing. I feel that if they're seriously seen to do that it could result in a massive bump in BTC as a genuine inflation hedge. I guess that's one of the classic arguments for BTC go up :D

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13.11.2023

Sam Kazemian ¤⛓️¤

I think any productive asset including ETH and FXS are great inflation hedges when there is actual inflation. The definition of inflation is that overall consumer items are increasing in price against USD. Thus any productive asset such as ownership in consumer producing corporations, productive digital assets like ETH, FXS, BTC, etc are all the right place to allocate to in a low interest rate, high inflation rate environment.

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13.11.2023

horse-shaped-smyl

Sam Kazemian ¤⛓️¤
I think any productive asset including ETH and FXS...

I guess we'll see if we get there. I still believe the Fed will act independently and keep rates high or even go higher if inflation persists. But I'm not sure that's such an issue for crypto anymore with the rates like IORB through sFrax coming on-chain.

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13.11.2023

Sam Kazemian ¤⛓️¤

horse-shaped-smyl
I guess we'll see if we get there. I still believe...

Right, no matter what the Fed does, we have the IORB rate now with sFRAX. DeFi can integrate sFRAX everywhere that needs to access that rate 💪

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13.11.2023

horse-shaped-smyl

Sam Kazemian ¤⛓️¤
Right, no matter what the Fed does, we have the IO...

I guess the task now is to get sFRAX into lending protocols so people can use it as collateral.

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13.11.2023

Jack

horse-shaped-smyl
I guess the task now is to get sFRAX into lending ...

Has this happened anywhere yet, are there Sfrax lending pools ? Assume this will be coming to fraxlend soon ?

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13.11.2023

Sam Kazemian ¤⛓️¤ · Accepted Answer

Sam Kazemian ¤⛓️¤

In theory government bonds are issued by a different entity and exogenous by definition. The Treasury Department issues tbills. The Federal Reserve prints dollars. Neither can print the other thing.

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13.11.2023

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Doesn'T a central bank buy gvt bonds as well?

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