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Created on: 3/14/2021 8:48:34 PM   Last Update: 3/15/2021 2:01:50 AM Posted by: RTT
WARNING: This entry is 1075 days old. It may contain broken links, out-dated or misleading content. Please read on with caution.

1 POST 1940s Yield Curve Control Review
1940s-yield-curve-control-reviewYield curve control was operational during and post World War 2 for a 9 year period.

The US stacked up a huge national war debt. With war comes with higher inflation, this time higher inflation could not be allowed to be followed by higher interest rates as the national income could not pay the interest bill and a sovereign debt default would follow. The response by the Federal reserve was to cap interest rates near 2.5% to contain the interest expense.

The chart below shows this period.

In the chart below while inflation (CPI) is above the 10 year interest rate this is known as 'negative yield' and purchasing power destruction of the currency (USD), hence why funds will flow into anti US dollar trades like gold, silver, bitcoin and oil.

The bond holders become the investors holding the short stick as inflation destroyers their capital, stocks do well, commodities do well. The problem for the FED is the bond holders are massive in number and for the FED to contain their selling they would have to buy all which is sold or convince this class of investor that it is best for national interest that they 'do not sell' and take the loss for the good of the nation. During World War 2 the bond investors made this patriotic choice, today maybe not so much, hence the FED buying could be exponential.   


Currently the FED is jawboning the idea of yield curve control for a period of 2 years. Get the feeling the DEM's are targeting mid term elections with the FED help, hmmmm.


POINT: The FED's choice is to trash the dollar to save the economy, or trash the economy to save the dollar. 


Reminder ..


..."I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that."..

Jesse Livermore



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Investing Quote...

.."Success in trading means excess of profits over losses. If anyone tells you they can almost be invariably successful, put him down as trying to impose on your credulity."..

Richard D Wyckoff


.."Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected"..

George Soros


.."Money couldn't buy friends, but you got a better class of enemy"..

Spike Milligan


.."Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of a great bull market is typically a blow-off, whereas the mania runs wild and prices go parabolic... There is no training, classroom or otherwise, that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market."...

Paul Tudor Jones


.."What greater wealth is there than to own your own life and spend it on growing"..


Ayn Rand




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