Bond Villain (When Powell devalued bonds, he destroyed the economy.) by Balaji

Balaji argues that the losses hitting banks and insurers, including American Coastal's bond holdings, stem from Federal Reserve policy rather than state mismanagement, and he blames Jerome Powell and Janet Yellen for a 2021 bond devaluation. He says the government sold bonds in 2021 and then the Fed's surprise rate hikes devalued them, producing unrealized losses that become realized in bank runs or hurricane season. He cites Stanford researchers' estimate of trillions in unrealized losses, a 722-bank figure from an internal Fed report, and $100B in unrealized losses at Bank of America. He also argues that hedging was impractical or discouraged in 2021 because the Fed called inflation transitory.