Global Intel Hub -- Charlotte, NC - 4/12/2021 - For those who are wondering why asset prices are continuing higher and if they will continue, here is your answer. It is a myth that markets are driven by supply and demand. Markets are manipulated and the Fed controls the money supply. When the Fed creates Trillions of dollars, that money flows into assets driving prices higher (Crypto, Stocks, Real Estate, etc.). As explained in Splitting Pennies - Monetary Policy moves markets, not traders. Take a look at this chart:
Let's first understand this simple chart. M1 is money stock. Jan 2020 there was $4 Trillion, now there is $18 Trillion. $14 Trillion was created since Jan 2020 - that's a 78% increase (14 created / 18 total).
Does the above chart remind you of anything?
Hmm... why are they so similar? Because BTC is a PAIR, it's denominated in USD. So what you are seeing in the above chart, BTC/USD is Bitcoin going up and the US Dollar going down. So the question is - BTC 60k means USD is going down or Bitcoin is going up? The FX answer is BOTH.
Now take a look at the M1 Fed chart inverted:
Traders, this is what the dollar debasement looks like. We are in hyperinflation - buckle up it's going to get bubbly.
When you invert the chart like this, the US Dollar went down by 78% in about 12 months. How much did BTC go up in the last 14 months? About 600%. How about stocks, real estate, or valuations of Pre IPO companies?
Or to look at it another way - Crypto is inflating at about 10x that of the USD. For BTC to go 100x making it 6 Million USD, we'd need to see a whopping 10x increase in M1, or 180 Trillion from today's 18 Trillion. That's all fine, but with those kind of increases, how much will it cost to buy bread, energy, food, housing, and other things you don't need because the Fed says so?
A select few know this well, but a quick note for the masses that watch too much TV (where they see nonsense like "Modern Monetary Theory").
The way the global monetary system is structured, is a debt based money system. The Fed acts as the master gate keeper of the debt based money supply. If banks, other central banks, Congress, or the IMF need money, they call the Fed.
"Hello Fed, Jamie here. I need 50 Billion. Ok. I see. Alright. Make it 80 Billion. Ok Please send by 4pm, EST, thanks." When that happens, which is just about several hundred times a week - that 80 Billion is created as debt in the form of wholesale loans. Those wholesale loans are repackaged by bank traders into loans like mortgages, bridge loans, T-Bills, Treasuries, and other types of financing. It's not 'money' that's why they call it "Quantitative Easing." The catch is that any debt comes with interest, although very low - that needs to be paid back.
In other words - here's the conclusion - The Fed NEEDS to continue QE or DEFAULT. There is no 'easy taper' that can provide a 'soft landing' by unwinding these massive transactions at this stage of the game. If Let's say the net interest on $4 Trillion in debt was 1% for the sake of argument, now with $18 Trillion it's $180 Billion. And this is happening in stocks, bonds, FX, and Crypto. They are using this massive free money to naked short and manipulate metals, which has been proven in court - in a business JPM inherited from the late Bear Stearns.
Dollar debasement is here. It's probably not what you expected. Many people had planned for the reverse; an apocalyptic zombie scenario where all markets crash and hungry dumpster diving neighbors become flesh eating cannibals (So said Ted Turner).
Actually, the Great Reset ain't that bad. TV? Check. Free stuff (stimulus)? Check. Weed legal? Check. No need to leave the house? Check. Pills, booze, and gaming? Check. Why there isn't any reason to leave your home anymore - is there?
Remember one thing, if you are reading this you probably aren't a billionaire Monopolist. Monopolies think different. A bank for example has all the money in the world it can create, banks don't need money - they need carcasses to feed - i.e. YOU. Bankers turn boat money into yacht money by making people poor, i.e. Dollar Debasement - not by earning money the hard way by you know, working - starting a business and taking risk. These people are not entrepreneurs and should not be rewarded for their efforts.
Here's a quick look at the numbers, that the Fed also publishes in text format:
2019-02-01 3783.4 2019-03-01 3746.4 2019-04-01 3770.6 2019-05-01 3775.4 2019-06-01 3813.4 2019-07-01 3844.8 2019-08-01 3844.0 2019-09-01 3887.7 2019-10-01 3926.1 2019-11-01 3955.6 2019-12-01 4011.2 2020-01-01 4018.9 2020-02-01 4027.6 2020-03-01 4280.2 2020-04-01 4773.3 2020-05-01 16275.9 2020-06-01 16601.8 2020-07-01 16795.0 2020-08-01 16911.1 2020-09-01 17184.0 2020-10-01 17376.3 2020-11-01 17620.1 2020-12-01 17840.5 2021-01-01 18120.6 2021-02-01 18411.9
You can see in May they broke their own rules 'for the cause' - B.ankers L.ives M.atter. They're in it to win it, no holds barred. God save the Queen. Do you think the British would just forget about what happened in 1776? The fight for America has always been about free currency - not about Tea or Slaves.
The likely outcome of the US Dollar's free fall will be 'trading curbs' on FX such as the Euro had in the 90s, which only allowed currencies to fluctuate inside of a trading band. Remember that the Fed controls all money including Crypto - as Crypto is denominated in US Dollars - and the current only way to buy Crypto is in Fiat currency. Sorry guys, Crypto is a closed system that's built on fiat. Replacing fiat with CBDC is another question - but for now, you can't buy Bitcoin with Gold, or anything OTHER than Money created by the Fed - now think about that for a moment. Just recently, the Feds are talking about 'shutting down the internet' to stop Crypto, and other absurdities.
Don't fall victim to the hype machine, that Bitcoin is somehow an alternative to the fiat system, when it is denominated in USD! Oh, the irony.. not to mention Bitcoin uses an NSA patented encryption algorithm, SHA-256. And the NSA is coincidentally tracking Bitcoin users.
It's definitely going to be an interesting market to trade, and it's not going away. Yes, it's overvalued, overbought- but take a look at the M1 chart if you need a further education about what's going on - this is not Crypto this is FIAT:
You don't need a finance degree to understand what's going on here. Of course, if you are glued to the TV and are inundated with thousands of media missiles a day from penny stock scammers like Agora and Stansbury, markets can seem confusing. But they are simple, M1 creation = markets go up.
The only scenario to make this bubble pop would be to destroy USD which the Fed theoretically could do. They could also raise rates. Is that on the horizon? Not likely. What's likely in the cards is more QE and more excuses to justify that QE, because they need to pay off the debt coming due on the QE just printed. Game on!