Real Vision founder: The Federal Reserve may be forced to adjust fiscal policy to prevent a liquidity crisis, and liquidity management has become a political game

Real Vision co-founder and CEO Raoul Pal posted that this week the Federal Reserve will likely be forced to fix the plumbing to prevent a funding crisis at the end of the month and year. Crypto is now like a liquidity tool that has been run on, with prices reflecting the discounted value from the plumbing bursting; U.S. stocks are temporarily supported by buybacks and year-end ranking battles, but if the issues are not resolved immediately, the script from 2018/19 could replay at any moment. The deeper battleground is at the Treasury: the Treasury now hopes to control liquidity through banks (increasing loans benefits the general public) rather than relying on the Federal Reserve's quantitative easing policy. This allows fiscal and monetary policies to remain aligned under the key goal of stimulating the general public while enabling Wall Street to benefit from currency depreciation, thus increasing collateral value. The benefits of quantitative easing will not trickle down to the general public. Liquidity management has now devolved into a political game rather than a monetary policy game.

Raoul Pal summarized that U.S. decision-makers will first fix the plumbing and then open the floodgates; asset inflation is merely delayed, not absent.