We’re at an inflection point in history right now. Things aren’t going back to how they used to be.
I don’t think the financial media understands this yet. But the bread crumbs have been in plain sight for over a year now.
It comes down to an arcane change at the core of our financial system.
Last year something called the Secured Overnight Financing Rate (SOFR) went live across the board.
I bet very few people out there even know what this is. And of those who do, I doubt many understood SOFR’s significance.
SOFR is a benchmark interest rate for dollar-denominated loans and derivatives.
We don’t need to go down a deep rabbit hole on this. What’s important to understand is that the interest rates for all loans in the U.S. are now influenced by SOFR.
The London Interbank Offered Rate (LIBOR) used to hold that privilege. Before this year those who influenced LIBOR could also influence interest rates in the U.S.
And that means the Fed did not previously have full control over U.S. monetary policy.
SOFR changed that.
Continue reading “The Beginning is Near”