American Exceptionalism: Not Looking Too Exceptional for 2022, by Matthew Piepenburg

A nation whose government is officially almost $30 trillion in debt and unofficially much, much more (unfunded liabilities), is not a great nation, it’s not even a mediocre one. From Matthew Piepenurg at

Below, we look at the converging market forces, policies and math which portend a re-thinking of American Exceptionalism for 2022.

The Fed’s REAL Mandate

As expected, the Fed is an essential starting theme in any conversation of this nature.

Officially, the Fed has two primary mandates: 1) containing inflation and 2) ensuring full employment.

But for those who understand even the most rudimentary (and sordid) history of central bank origins and operations, its real mandate is serving (controlling?) the banking and market masters from whom it was not-so-immaculately conceived on Jekyll Island…

Critical to this rigged-to-fail charade is the Fed’s artificial manipulation of otherwise natural supply and demand forces with regard to Uncle Sam’s increasingly unloved IOU’s—aka: U.S. Treasuries.

Stated simply: There is far more supply than there is demand for America’s exceptional promises.

Filling the Gap with Artificial Zeros & The Taper’s Hard Math

To fill this gap, the Fed desperately adds zeros to its balance sheet (QE) to purchase these increasingly unpopular credits.

Of course, any meaningful taper of this “gap financing” (i.e., Fed accommodation) would create what Powell euphemistically described in December as a “market dysfunction,” the occurrence of which would violate the Fed’s unofficial yet openly obvious (and primary) mandate of propping stocks not citizens.

The mathematical syllogism behind such a potential “market dysfunction” is algebraically quite simple, namely:

Less Fed bond purchases would = lower bond prices.

Lower bond prices = higher bond yields.

Higher bond yields = higher interest rates.

Higher interest rates = higher costs of debt…

…and for nations and corporations hitherto living exclusively off cheap debt, such higher debt costs = a severe “uh-oh” moment in the risk asset bubbles (stocks, bonds and real estate) which the financial world has confused with an “economic recovery.”

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