from Balaji | by Balaji

The Fed doesn't just forecast rates. IT SETS THEM. Trillions is allocated on their forecasts. They're upstream of the entire economy. And what they did was: - forecast 0.1% in 2023 - sell long-term bonds on that basis - actually set rates to 4.75% (47X higher!) - devaluing the…

Some say "oh, just hedge the rate risk." Doable if forecast is 1%, actual is 1.1% Impossible if forecast is 0.1%, actual is 4.75% That's off by >47X. You're dead. And so is everyone else. Because the other bond buyers invested on the wrong guidance too.