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

On November 17, Raoul Pal, co-founder and CEO of Real Vision, posted that the Fed will likely be forced to “fix the pipes” this week to prevent a funding rupture crisis at the end of the month and year. Crypto now resembles a financing tool that is facing a bank run, with prices reflecting a discount due to “pipes bursting”; U.S. stocks are temporarily supported by buybacks and year-end ranking battles, but if issues are not resolved immediately, the script of 2018/19 could replay at any time. The deeper battlefield is at the Treasury: the Treasury now hopes to control liquidity through banks (increasing loans benefits the general public), rather than relying on the Fed's quantitative easing policy. This allows fiscal policy and monetary policy to remain aligned under the key objective of stimulating the general public while allowing Wall Street to benefit from currency depreciation, thereby increasing the value of collateral. The benefits of quantitative easing will not reach the hands of the general public. Liquidity management has now devolved into a political game rather than a monetary policy game. Raoul Pal concluded that U.S. policymakers will “fix the pipes first, then open the floodgates; asset inflation is just delayed, not absent.”