I don't know if you know, but the fed can buy the debt of the government. So print paper (dollar), give to gov and gov give back paper (debt). Simple?
The funny thing is that when you do this you are becoming a little bit more like soviet union (or japan if you are kind, but i am not 😤).

But what is the relation with rate cut? If you print money faster than you print wealth, you get inflation right? and how you counter inflation? with rate hikes! (you can't print wealth in fact, unless you are Jensen Huang and pronounce the letters "A" and "I" in this order).

Now some big brain: you get inflation if the rate is way lower than growth, so everyone is borrowing money and do stupid things with it (more money, same wealth). So the fed get in, do the rate hike, and all the regards that borrowed money go bankrupt, money go low, inflation go low. Rate cut back to normal. All good.

But now who is borrowing too much money since 2008? The gov you got it.

Here the chart 🥰:

Federal debt held by federal reserve bank (you need good eyes, I know... or use zoom while you still can)

You can see that from 1970 to 2007 everything goods, capitalism at his best, nothing to report.

Then 2007, rate hike (maybe because it was too low before?). The fed also take advantage of this time and sell its gov bond on the market (the free one).

2008 💥📉 capitalism collapses, the gov come, lower the rates, and saves all his good friends (but not Lehman, bad friend 👎). You can note that is it the beginning of the soviet union🟥, from now on the gov solves everything with money (printed by the fed if necessary): europoor crisis (i'm europoor 😭), whatever happened in 2014 (the russian again?) and the covid, all solved like this, but we are going too fast...

2018-2019 rate hikes (I don't remember why, I was in college at this time, but whatever rate hike). The fed can sell a little bit of its gov bond and come back a little bit closer to free capitalism 💸🦅.

2020, you know what happened, soviet union on whole earth 🇨🇳, money printing going brrr, etc. 😔

2022: big inflation, rate hikes to make the bad companies goes bankrupt as usual and kill inflation, but what? the company to destroy to reduce the inflation is the gov now? can the gov go bankrupt? (it can't) So the free market is scarified to reduce the inflation? nooooo 😭 what? Jensen Huang is coming to save us all with AI 😱 (sadly this is not going to last).

Anyway, there is two options I see here:

  1. Soviet union (or japanese) way: the rate stays highs, the only companies that survive are the one receiving subsidies from the government, which is the only one still able to borrow money without going bankrupt. So full soviet union and no more free market... (or a pelosi like market?) And maybe there is gulag or zombies, or both; didn't guessed yet 🤔, but a lot of snow and gray filter for sure.

  2. The "we tried our best" way: Joe Pow the ununderstandable come and say we tried but it didn't worked (since the inflation is due to the gov this time, and it cannot go bankrupt). This thing should happen, according to my crayons, around Q1 2025. Basically when the poor will stop buying gov dept and the fed will have to buy it themselves instead. Lowering the rate at this point will lower the speed at which the gov dept capitalizes itself, and inflation will make it easier to pay back (and why sacrifice the free market for free?) basically the same thing that happened in 2008, but this time its only gov fault 😤.

What do you think my fellow regards? Are we all going to the gulag? or is it capitalism and free market again? Did I eat too much crayon?
Let me know in comment (or not idc)

TL:DR look at the chart, obvious Q1 2025 rate cut amarite?

best regards