Thread by @BTC_JackSparrow, 1/ Let's talk stimulus (or lack thereof)During the market crash of 1929-'32 [...]

1/ Let& #39;s talk stimulus (or lack thereof)

During the market crash of 1929-& #39;32 (-89.49% $DJI) monetary policy was the opposite of today& #39;s day and age: tight

Quantative tightening vs easening

Every cycle had its own "experimental" approach to "fix" that what couldn& #39;t be fixed

2/ In the 1930& #39;s banks didn& #39;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

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

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

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

6/ This cycle& #39;s policy direction is clearly to debase "money" (really, it& #39;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

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

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& #39;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">https://twitter.com/BTC_JackS...

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

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">

10/ The reality is that, if we account for increased money supply, this is true for American banks as wellBanks are not as profitable as they used to be as interest rates keep droppingBank of America & JP Morgan Chase stock prices accounting for M1 and M2 expansion https://abs.twimg.com/emoji/v2/... draggable=

" title="10/ The reality is that, if we account for increased money supply, this is true for American banks as wellBanks are not as profitable as they used to be as interest rates keep droppingBank of America & JP Morgan Chase stock prices accounting for M1 and M2 expansion https://abs.twimg.com/emoji/v2/... draggable="false" alt="👇" title="Rückhand Zeigefinger nach unten" aria-label="Emoji: Rückhand Zeigefinger nach unten">">

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

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& #39;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?"

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