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.
Do you share the feeling that there is a non insignificant difference between theory and practice in this case?
My personal opinion is that de facto they are the same entity even though de jure and nominally they are supposed to be different.
You don't think the Fed will be able to resist easing off inflation to suppress the government's increase debt servicing requirements?
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.
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
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.
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.
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 💪
I guess the task now is to get sFRAX into lending protocols so people can use it as collateral.
Has this happened anywhere yet, are there Sfrax lending pools ? Assume this will be coming to fraxlend soon ?
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