The Year Ahead In Crypto
Comment of the Day

March 24 2022

Commentary by Eoin Treacy

The Year Ahead In Crypto

This note from Panterra Capital may be of interest to subscribers. It is more of a retrospective look at what happened in 2021 but includes some interesting copy on the broad macro environment. Here is a section:

The next step in their complicated minuet – after “taper” comes “run off”.  That’s not going to get it done either.  The Fed’s holdings make it impossible to fight inflation by waiting for higher interest rates based on runoff.  More than 97% of the $2.6 trillion in mortgage-backed securities owned by the Fed won’t mature for at least ten years.  Only 20% of the Fed’s $5.6 trillion in Treasury securities will come due in the next year.  42% have maturity dates longer than five years out.

And

“Inflation persistently below its goal”?  This is embarrassingly behind the curve.  Measured inflation is at 7.0%.  That includes the spurious owners’ equivalent rent of only 3.1%.  If real housing inflation were included it would be double-digits – all 1970’s style.  (The lagged effect of true housing inflation will show up in CPI over the next two years.)

Eoin Treacy's view

The Fed is talking about accelerating pace of the balance sheet run off. With 20% of its holdings maturing in the next 12 months, that offers significant leeway to make run-off the primary tool for restricting inflationary pressures.

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