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>something flipped.

China dumped 500B in treasuries and the basis trade blew up is what happened

Tariff deals were still going to happen regardless. The pause is a stop gap for the basis trade (20+x levered), of which an uncontrolled unwinding threatens the entire financial system. Fed already had a bailout facility ready as a plan B. Too big to fail and all that

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It's okay, the Fed has been insolvent at least two years now https://thehill.com/opinion/finance/3955889-the-fed-is-bankr...

Calling the Fed bankrupt isn't a close to accurate description of what was described in the column. The post describes a unhealthy balance sheet, but the Fed can't go "bankrupt" in the common sense, as it banks itself, with the assets held on it's ledgers purchased and backed by the hypothetically infinite monetary supply. All that was described in the column wasn't bankruptcy as they put it, but how the Fed organizes assets by their quality.

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