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1/ Let's talk stimulus (or lack thereof)
During the market crash of 1929-'32 (-89.49% $DJI) monetary policy was the opposite of today's day and age: tight
Quantative tightening vs easening
Every cycle had its own "experimental" approach to "fix" that what couldn't be fixed
During the market crash of 1929-'32 (-89.49% $DJI) monetary policy was the opposite of today's day and age: tight
Quantative tightening vs easening
Every cycle had its own "experimental" approach to "fix" that what couldn't be fixed
2/ In the 1930's banks didn't inflate the monetary base, nor did they buy assets, and the effects of the tightening policy is very visible on this chart
Pretty much a straight rocket down on quarterly basis for 3 years
Pretty much a straight rocket down on quarterly basis for 3 years
3/ System resets are off cyclic nature, averaging around 90-100 years and have been accompanied with a switch of world power and reserve currency for many centuries on end
You may have seen this chart before
You may have seen this chart before
4/ Quantative easing was not invented in this day and age
Study the past and you will see that similar, perhaps more primitive but similar none the less, policies have been applied
Generally speaking, from what I have read, policy never changed direction until full collapse
Study the past and you will see that similar, perhaps more primitive but similar none the less, policies have been applied
Generally speaking, from what I have read, policy never changed direction until full collapse
5/ A second thing I learned is that odds were higher for an opposite policy direciton in comparison to the most recent market cycle end/start (recency bias?)
So, tightening last time? Easening likely in next cycle
Keep reading, we are getting to the point
So, tightening last time? Easening likely in next cycle
Keep reading, we are getting to the point
6/ This cycle's policy direction is clearly to debase "money" (really, it's not been money for a long time), quantative easening, to combat economic problems
The FED has registered ~$3 trillion in assets to their balance sheet as a response
The FED has registered ~$3 trillion in assets to their balance sheet as a response
7/ Money supply is separated in two categories
M1 (readily available for spending) and M2 (M1 + savings, time deposits, mutual funds)
In the US:
M2 - M1 grew 14.69% by 1.687T
M2 grew 20.68% by 3.207T
M1 grew 38.49% by 1.55T as a result of QE
M1 (readily available for spending) and M2 (M1 + savings, time deposits, mutual funds)
In the US:
M2 - M1 grew 14.69% by 1.687T
M2 grew 20.68% by 3.207T
M1 grew 38.49% by 1.55T as a result of QE
8/ Clearly the FED went max capacity on those buys
But this was just round one
More trouble is ahead economically and the reaction to fix it will be the same we saw earlier this year
Print more, buy more
More trouble ahead? Yes, let's continue
But this was just round one
More trouble is ahead economically and the reaction to fix it will be the same we saw earlier this year
Print more, buy more
More trouble ahead? Yes, let's continue
9/ Banks are not doing well
If there is one chart that shows how things really are, this could be the one: EU systemic banks index futures
https://twitter.com/BTC_JackSparrow/status/1236588798101712897?s=20
If there is one chart that shows how things really are, this could be the one: EU systemic banks index futures
https://twitter.com/BTC_JackSparrow/status/1236588798101712897?s=20
10/ The reality is that, if we account for increased money supply, this is true for American banks as well
Banks are not as profitable as they used to be as interest rates keep dropping
Bank of America & JP Morgan Chase stock prices accounting for M1 and M2 expansion
Banks are not as profitable as they used to be as interest rates keep dropping
Bank of America & JP Morgan Chase stock prices accounting for M1 and M2 expansion
11/ One way to prevent a 2008-like liquidity crisis is to make sure the stock market stays afloat by buying stocks, providing liquidity to keep the economy going
Clearly this is the strategy taken and no doubt this strategy will continue until it fails or works
Clearly this is the strategy taken and no doubt this strategy will continue until it fails or works
12/ The reality of the stock market is that no new highs were made in value terms
The S&P500 is technically -30% vs M1 and -20% vs M2
Economic stability occurs when the effect of stimulus allows for these charts to trend up again
It's going to take a while - and more stimulus
The S&P500 is technically -30% vs M1 and -20% vs M2
Economic stability occurs when the effect of stimulus allows for these charts to trend up again
It's going to take a while - and more stimulus
13/ Considering history and current environment plus policy, the question is unlikely to be: "stimulus or no stimulus?"
But: "When stimulus?"
But: "When stimulus?"
